Press Release

Mastek makes second insurance acquisition in USA

Acquires the P&C segment focused STG International, expands presence into non-life segment of insurance vertical

– Earnings and value accretive acquisition
– positions Mastek as leading solutions provider in Insurance space
– strengthens Mastek’s intellectual property (IP) portfolio
– adds multiple customers in North America’s PandC insurance industry

Mumbai, 8 March 2008

Mastek, a leading IT solutions player with global operations providing new technology and IP-led enterprise solutions to insurance, government, and financial services organizations worldwide, today announced the acquisition of Systems Task Group (STG) International Ltd, an IP-based enterprise solutions provider to the North American property and casualty (P&C) insurance industry. This acquisition is the second such initiative by Mastek during the current financial year, and follows the acquisition of another insurance-focused IT company Vector Insurance Services in July 2007. Under the terms of the agreement, Mastek’s whollyowned US subsidiary MajescoMastek will hold 100% equity stake in STG. The consideration for this acquisition will be paid partly in cash and partly by way of future cash earn outs. Following this transaction, STG will operate as “STGMastek”.

Headquartered in New York with a fully integrated offshore competency centre in Mumbai (India), STG leverages its enterprise applications “Renaissance” suite and “ParadigmASP” to provide the full spectrum of solutions and services to customers in the North American P&C insurance industry in the areas of policy and billing administration, claims processing, and point-of-sales administration. The company has about 350 employees with significant P&C insurance domain expertise and a robust customer base that includes over 35 small and mid-sized American insurance carriers.

Keeping in view that Mastek already has an intellectual property (Elixir™) and a growing market presence in the life and annuity segment that was accelerated by the acquisition of the US-based Vector Insurance Services (now VectorMastek) in July 2007, this latest transaction in the non-life segment is expected to noticeably strengthen Mastek’s market position and expand the opportunity pipeline in the overall insurance vertical.

Commenting on the acquisition, Sudhakar Ram, Chairman & MD, Mastek, said:

“This acquisition is another important step in furthering our strategy to expand our presence in both the life and non-life segments of the high opportunity US insurance market. STG enjoys very strong brand recognition and has over the years built a satisfied customer base in the P&C insurance industry. With STG’s established strengths in the P&C segment complementing our own competencies in the life & annuity segment, our status as a leading IP-based enterprise-wide solutions provider in the insurance vertical will be reinforced with this initiative.”

Praful Nikam, STG’s Chairman and Founder, said:

“We are very enthusiastic about the opportunities presented by joining Mastek. They have world-class processes and capabilities, as well as a global presence and strong intellectual property. We believe that our existing and future customers will substantially benefit from the size and scale of Mastek and their superior system integration capabilities and processes.”

Rationale for the transaction

STG comes with a very attractive operating profile, comprising of an IP that is successful and well-accepted in the marketplace, a unique go-to-market business model, deep domain expertise and project management skills embedded in about 350 senior professionals, proven track record that spans more than 17 years with a 100% implementation success rate, and over 35 customers that include names like Tokio Marine Management (TMM), GMAC Insurance, RLI Insurance, FCCI Insurance, Amerisure, Bituminous, Max Specialty, and Ford Financials amongst others.

A strong IP backed by an integrated offshore competency centre located in Mumbai enable STG to deliver end-to-end solutions and services to customers. Its offerings for the P&C segment enjoy positive ratings in the marketplace by leading industry research groups such as Celent on many parameters such as technical flexibility, depth of client services, and breadth of functionality. The P&C segment itself is a high potential market, with IT spending by P&C insurers expected to cross US$20 billion by 2010 from US$16 billion in 2007 (as per Celent estimates).

The acquisition will be value accretive to Mastek both financially and operationally. STG reported revenues of US$17 million and an EBITDA of US$1.73 million for the financial year ended Dec.31, 2007. With more than 17 years of experience in building and delivering enterprise class applications around its own IP, STG has a proven and evolved capability across multiple technology platforms: host based, client-server, and web-browser based. Its capabilities in the area of IP development and product lifecycle management fits very well with Mastek’s own focus on IP creation and IP-led IT solutions.

Mastek’s larger scale of operations and strong IP-led capabilities in the life & annuity segment of the insurance vertical, combined with STG’s IP-led client base and presence in the property & casualty segment, is expected to enable significant leverage across the entire insurance space and at multiple points in the value chain.

This initiative is in line with Mastek’s three-pronged strategy to drive revenue and earnings expansion over the long term by enhancing SG&A productivity through a verticals approach, adding new partnerships and strategic accounts in focus verticals, and making well-considered acquisitions that complement its existing strengths in terms of skill-sets or customer base.

Details of the transaction

Mastek will be acquiring a 100% equity stake in STG International Ltd in an all-cash transaction for US$29 million, with 85% of the total consideration payable at this time and the remainder to be linked to ongoing performance and paid by way of earn-outs. The acquisition is being funded through internal accruals and bank borrowings. STG was advised by Avendus in this transaction.

Integration process to be completed by June 2008

The integration of STGMastek with Mastek’s existing operations is likely to be completed in about 90 days, and its contribution will be reflected in Mastek’s consolidated performance partly in FY2008 and fully in FY2009. STG has built a loyal customer base in the region and will continue to serve its customers with enhanced abilities enabled by the acquisition. The STG management team, including its founder Praful Nikam, will continue to be actively involved in its operations and support William McCarter, who will be taking over as President of STGMastek. McCarter had joined Mastek last year as head of its US operations and has over two decades of experience in the North American P&C insurance industry. He will now focus on leveraging the newly created synergies following this transaction to drive growth in STGMastek’s operating and financial performance. All other managers and employees, including about 350 professionals with extensive experience in the P&C insurance segment, will also be retained and will continue to support Mastek in its objective to grow its insurance vertical business in North America.

Given STGMastek’s IP offerings and track record, this acquisition is expected to strengthen Mastek’s market position in the insurance vertical and enable greater value creation for the company’s shareholders going forward.

About Majesco

Majesco is a provider of core insurance technology software and IT services to insurance carriers (P&C and Life, Annuity, Group) globally. Majesco delivers proven software solutions and IT services in core insurance areas including policy administration, billing, claims and distribution.

Media Contact

Majesco
Tara Dilzer Alexander
Director, Marketing Communications and Creative Services
Phone: +1-718-916-6873
Email: tara.dilzeralexander@majesco.com

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