Persistent Systems Limited — M&A Activity 2021

Sep 29, 2021

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NSE & BSE / 2021-22 / 86

September 29, 2021

The Manager, Corporate Services, National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla Complex, Bandra (E), Mumbai 400 051

Ref: Symbol: PERSISTENT

The Manager, Corporate Services, BSE Limited 14[th] Floor, P J Towers, Dalal Street, Mumbai 400 001

Ref: Scrip Code: 533179

Dear Sir/Madam,

Sub: Intimation pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SEBI Circular No. CIR/CFD/CMD/4/2015 dated September 9, 2015

Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the ‘Regulations’), we wish to inform about the following transactions:

1. Persistent Systems Inc., USA, a wholly owned subsidiary of the Company has entered into a Stock Purchase Agreement with Software Corporation International (“Software Corporation”) and its affiliate Fusion360 LLC (“Fusion360”), on September 29, 2021 to acquire Software Corporation and Fusion360 (together referred to as (“SCI”) hereinafter).

The acquisition is subject to customary closing conditions which are expected to be completed within 2 weeks. Accordingly, the Company will inform the closure of the transaction to the stock exchanges.

1. Persistent Systems Limited (‘the Company’) has entered into an Agreement with Shree Infosoft Pvt. Ltd., India (‘Shree Infosoft’) on September 29, 2021 to acquire its business. Along with this transaction, the Company, through its wholly owned subsidiary, Persistent Systems Inc., USA, will acquire certain assets from Shree Partners LLC, USA, (Shree Partners) Parent company of Shree Infosoft.

The acquisition is subject to customary closing conditions which are expected to be completed within 3 ‐ 5 weeks. Accordingly, the Company will inform the closure of the transaction to the Stock Exchanges.

Persistent Systems Limited, Bhageerath, 402 Senapati Bapat Road, Pune 411 016, Maharashtra, India CIN - L72300PN1990PLCO56696

Tel: +91 (20) 670 30000 | Fax - +91 (20) 6703 0008 | E-mail - info@persistent.com | Website - www.persistent.com

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In this regard, please find enclosed intimation and the details of the said acquisitions as prescribed under Reg. 30(2) and (6) of the Regulations read with Schedule III to the Regulations and SEBI Circular No. CIR/CFD/CMD/4/2015 dated September 9, 2015 as Annexures A and B respectively for Point No. 1 and 2 above.

Please acknowledge the receipt.

Thanking you,

Yours Sincerely, For Persistent Systems Limited

Digitally signed by AMIT MURARI AMIT MURARI ATRE ATRE Date: 2021.09.29 16:03:26 +05'30' Amit Atre Company Secretary ICSI Membership No.: A20507

Encl.: A/a

Persistent Systems Limited, Bhageerath, 402 Senapati Bapat Road, Pune 411 016, Maharashtra, India CIN - L72300PN1990PLCO56696

Tel: +91 (20) 670 30000 | Fax - +91 (20) 6703 0008 | E-mail - info@persistent.com | Website - www.persistent.com

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Annexure A:

No.	Items of Disclosure	Description
1	Name of the target entity, details in brief such as size, turnover etc.;	Software Corporation International and its affiliate Fusion360 LLC. Software Corporation and Fusion360 have integrated business operations with deep domain expertise in Payments solutions, integration, and support services for an impressive portfolio of leading North American banks. The consolidated revenue of SCI was $17.08 M for theyear ended December 31, 2020.
2	Whether the acquisition would fall within related party transactions and whether the promoter/ promoter group/ group companies have any interest in the entity being acquired? If yes, nature of interest and details thereof and whether the same is done at “arms length”;	The acquisition does not classify as a related party transaction. The promoter/ promoter group have no interest in the entity being acquired.
3	Industry to which the entity being acquired belongs;	Consulting / IT Services with focus in Payments domain.
4	Objects and effects of acquisition (including but not limited to, disclosure of reasons for acquisition of target entity, if its business is outside the main line of business of the listed entity);	SCI brings domain consulting capabilities and specializes in Payments solutions, integration, and support services for leading US Banks.
5	Brief details of any governmental or regulatory approvals required for the acquisition;	As per our understanding, no governmental or regulatory approvals are required for the acquisition.
6	Indicative time period for completion of the acquisition;	It is expected that the acquisition will be completed (Closing of the transaction) within 2 weeks or as soon as thereafter subject to satisfaction of customaryclosingconditions.
7	Nature of consideration – whether cash consideration or share swap and details of the same;	The purchase consideration shall be paid in cash.
8	Cost of acquisition or the price at which shares are acquired;	The total purchase consideration payable for the acquisition of Software Corporation International and Fusion 360 LLC is $53 M. This includes:

Persistent Systems Limited, Bhageerath, 402 Senapati Bapat Road, Pune 411 016, Maharashtra, India CIN - L72300PN1990PLCO56696

Tel: +91 (20) 670 30000 | Fax - +91 (20) 6703 0008 | E-mail - info@persistent.com | Website - www.persistent.com

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		• Upfront paymentof $34.45 M to shareholders of SCI, subject to customary adjustments for working capital, debt and cash on Closing. • Earnout –shareholders of SCI will be eligible for a maximum amount of $5.96 M per annum over next two years. This amount is contingent on achievement of certain performance thresholds. • Retention Payment– Key employees and consultants of SCI will be eligible for an aggregate amount of $ 2.21 M per annum at the end of Year 1,Year 2andYear3.
9	Percentage of shareholding / control acquired and / or number of shares acquired;	Post-closing, 100% of ownership of Software Corporation and Fusion360 will be acquired by Persistent Systems Inc.
10	Brief background about the entity acquired in terms of products/line of business acquired, date of incorporation, history of last 3 years turnover, country in which acquired entity has presence and any other significant information (in brief)	Software Corporation was incorporated in 1990 while Fusion360 was incorporated in 2011 in the US. • Software Corporation provides consulting services in the payment ecosystem with respect to products such as ACH, Check Processing Systems, Corporate Payments, SWIFT, SEPA, digital payments, including Zelle and The Clearing House RTP network in the US. It leverages payment platforms such as Financial Transaction Manager (FTM) to provide payment consulting services. • Fusion360 supports consulting services of Software Corporation with application development, maintenance, and support services for leading payment platforms. Software Corporation and Fusion360 have an integrated business operation and their teams often jointly work on customer engagements. Consolidated revenues for SCI for the historical period are as follows: • CY 2020: $17.08 M • CY 2019: $15.18 M • CY 2018: $13.32 M

Persistent Systems Limited, Bhageerath, 402 Senapati Bapat Road, Pune 411 016, Maharashtra, India CIN - L72300PN1990PLCO56696

Tel: +91 (20) 670 30000 | Fax - +91 (20) 6703 0008 | E-mail - info@persistent.com | Website - www.persistent.com

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Annexure B:

No.	Items of Disclosure	Description
1	Name of the target entity, details in brief such as size, turnover etc.;	Shree Partners LLC, USA along with its Indian subsidiary, Shree Infosoft provides Application Development, Cloud, Data and Analytics, IT infrastructure management and support services. Shree Partners and Shree Infosoft had consolidated revenues of $7.6 M for the year ended March 31, 2021.
2	Whether the acquisition would fall within related party transactions and whether the promoter/ promoter group/ group companies have any interest in the entity being acquired? If yes, nature of interest and details thereof and whether the same is done at “arms length”;	The acquisition does not classify as a related party transaction. The promoter/ promoter group have no interest in the entity being acquired.
3	Industry to which the entity being acquired belongs;	Application Development, Cloud, Data and Analytics, IT infrastructure management and support services.
4	Objects and effects of acquisition (including but not limited to, disclosure of reasons for acquisition of target entity, if its business is outside the main line of business of the listed entity);	The acquisition provides strategic benefits by enabling Persistent to deliver critical services to a strategic client which is a leader in the global claims management industry. Shree’s expertise also expands Persistent’s BFSI footprint in the cloud, data, and infrastructure domains. This acquisition also adds a new delivery location for Persistent in National Capital Region (NCR), India.
5	Brief details of any governmental or regulatory approvals required for the acquisition;	As per our understanding, no governmental or regulatory approvals are required for the acquisition.
6	Indicative time period for completion of the acquisition;	It is expected that the acquisition will be completed (Closing of the transaction) within 3-5 weeks or as soon as thereafter subject to satisfaction of customaryclosingconditions.
7	Nature of consideration – whether cash consideration or share swap and details of the same;	The purchase consideration shall be paid in cash.
8	Cost of acquisition or the price at which shares are acquired;	The purchase consideration payable for the acquisition of business and assets of Shree Infosoft and Shree Partners LLC is $6.87 M.

Persistent Systems Limited, Bhageerath, 402 Senapati Bapat Road, Pune 411 016, Maharashtra, India CIN - L72300PN1990PLCO56696

Tel: +91 (20) 670 30000 | Fax - +91 (20) 6703 0008 | E-mail - info@persistent.com | Website - www.persistent.com

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		In addition to the upfront of $2.37 M in USA and $1 M (INR 7.35 Cr.) in India, contingent consideration will be as follows: • Earnout –shareholders of Shree Partners LLC will be eligible for a maximum amount of $1.5 M per annum over next two years. This amount is contingent on achievement of certain performance thresholds. • Retention Payment– Key employees will be eligible for an aggregate amount of $500,000 over the next three years.
9	Percentage of shareholding / control acquired and / or number of shares acquired;	The Company and Persistent Systems Inc. have not invested into the Share Capital of Shree Infosoft and Shree Partners LLC.
10	Brief background about the entity acquired in terms of products/line of business acquired, date of incorporation, history of last 3 years turnover, country in which acquired entity has presence and any other significant information (in brief)	Incorporated in 2005, Shree Partners LLC along with Shree Infosoft Pvt. Ltd. provides data management and analytics, IT infrastructure management and support services to companies based predominantly out of the US. Consolidated Revenue of Shree partners LLC, USA for the historical period is as follows: FY 2020-21: $7.6 M FY 2019-20: $8.7 M FY 2018-19: $6.0 M

Persistent Systems Limited, Bhageerath, 402 Senapati Bapat Road, Pune 411 016, Maharashtra, India CIN - L72300PN1990PLCO56696

Tel: +91 (20) 670 30000 | Fax - +91 (20) 6703 0008 | E-mail - info@persistent.com | Website - www.persistent.com