Virtusa to expand in Sri Lanka and India with funds from $92mn US IPO

The company, headed by a Sri Lankan, filed for for the IPO last Friday with the US Securities and Exchange Commission.

The firm hopes to use 30 million dollars of the proceeds to fund the construction of a new facility on its planned campus in Hyderabad, India, over the next three years.

The balance will be used for working capital and other general corporate purposes, including to finance the expansion of its global delivery centres in Colombo and Chennai, India.

The proceeds would also be used to hire more people, sales and marketing activities, capital expenditures, and “possible strategic alliances or acquisitions”.

Virtusa did not say how many shares will be offered in the IPO or at what price.

Virtusa, co-founded by its chairman and Chief Executive Officer Kris Canekeratne, also has offices in the US and the United Kingdom.

The company has applied to list the stock under the symbol ‘VRTU’ on the NASDAQ Global Market.

“We have experienced compounded annual revenue growth of 47% over the four-year period ended March 31, 2006,” a company statement said.

“We may use a portion of these net proceeds (of the IPO) to expand our business into new geographic locations. We may also use a portion of these net proceeds to expand our current business through strategic alliances involving, or acquisitions of, other complementary businesses or technologies.”

However, it said it had no agreements or commitments for any specific acquisitions at present.

Virtusa reported a net profit of 15.5 million dollars for the nine months ended December 31, 2006, compared with a net loss of 625,000 dollars in the same 2005 period.

The company also said that under its dividend policy it had never declared or paid cash dividends on its common stock and does not expect to pay dividends in the foreseeable future.

“We currently intend to retain all of our future earnings to fund the operation, development and expansion of our business. In addition, the terms of our credit facility prohibit us from paying cash dividends,” the company said.

Massachusetts-based Virtusa Corp., an information-technology services firm with operations in Sri Lanka, is seeking 92 million dollars through a NASDAQ listing.