Luxoft

For 2017, Luxoft is registered in the British Virgin Islands (Tortola). The current head office is located in Zug (Switzerland). The company is listed on the New York Stock Exchange (NYSE).

Aktivs

For 2017, the company develops its own technological solutions and provides services from 32 specialized centers around the world. Luxoft has more than 12,000 employees and 39 offices in 19 countries in North America, Western and Eastern Europe, Asia-Pacific, and Mexico and South Africa.

Luxoft 2017 Office Map

The main development centers of the company are located in Russia and Europe.

Luxoft Ukraine

Main article: Luxoft Ukraine

Luxoft Romania

Main article: Luxoft Romania

Luxoft Poland

Main article: Luxoft Poland

Tech Centre in London

In August 2010, Luxoft announced the opening of a technical development center in. London The center will be engaged in development, software troubleshooting service and support for Luxoft customers from. Great Britain The costs of creating it in the company are not disclosed.

At the expense of the new center, Luxoft plans to improve the provision of services for London-based customers, in particular, Deutsche Bank, the Swiss financial company UBS AG and the French nuclear concern Areva, as well as attract new consumers. The center was opened in partnership with telecommunications equipment manufacturer Avaya, which will use it to develop solutions in the field of IP telephony.

It was because of Avaya that the decision was made to create an office in London, Mikhail Fridlyand, vice president of Luxoft, told CNews. According to him, the center now employs about 30 people, in the future it is possible to increase the staff to 100. The office staff was recruited mainly from among British specialists, but some of the engineers were transferred to London from the Russian and Romanian offices of Luxoft.

Luxoft Training Center

Main article: Luxoft Training

In 2022, after the outbreak of the conflict in Ukraine, it was transferred to IBS and renamed IBS Training Center.

Performance indicators

Main article: Luxoft's financial performance

History

2022

More than 1.5 thousand Luxoft employees transferred to IBS

As TAdviser found out, the Russian Luxoft team, which the global company transferred to the Russian IBS group in April 2022, will operate on the market under the IBS InfiniSoft brand created specifically under it .

According to the Kontur. Focus service, the Russian legal entity Luxoft Professional changed its name to IBS InfiniSoft in May 2022. This model of business integration Luxoft, with the preservation of TIN and OGRN, will allow the company to maintain not only existing contracts, but also established internal business processes. Moreover, IBS InfiniSoft will be an independent business unit. Read more here

Transfer of Russian business to IBS

On April 22, 2022, it became known about the transfer of Luxoft's Russian business to IBSAnatolia Karachinsky. The relevant information is contained in the Unified State Register of Legal Entities.

According to Interfax, citing data from this system, on April 20, 2022, Cyprus-based Luxoft International transferred 100% of Luxoft Professional LLC to IBS IT Services LLC and IBS LLC, they received 99% and 1%, respectively.

Luxoft handed over Russian business to IBS

An IBS representative in a conversation with the agency confirmed the transfer of the Russian business segment Luxoft to the IBS group of companies. Under the agreement, two legal entities were transferred: Luxoft Professional LLC and ANO DPO Luxoft Training Center, "the Interfax source said.

The publication recalls that IBS was previously the largest shareholder of Luxoft, but sold its stake to the American DXC Technology.

The transfer of Luxoft's Russian assets to IBS became known after the main owner of IBS Anatoly Karachinsky fell under American sanctions. IBS was included in the SDN list of the US Treasury Department, which means that American companies and citizens are prohibited from having relations with the defendant and assets controlled by him, in the United States they are frozen. But in fact, under the threat of secondary sanctions, as a rule, interaction with all foreign partners is violated.

{{quote 'The owner will probably have to transfer the share and leave the management bodies so that the company can function normally and continue to work with foreign technological partners, customers and banks, - believes the managing partner of the EBR Alexander Zhuravlev, commenting on Kommersant's imposition of sanctions against Anatoly Karachinsky. }} The source of the newspaper in the information security market believes that for IBS sanctions are critical both in terms of the supply of equipment, for example, for information security, and in terms of working with partners abroad.^[1]

The company is not leaving Russia yet because it is afraid of lawsuits

Dmitry Loshchinin, executive vice president of DXC Technology and CEO of Luxoft, said in April 2022 that the company could not completely leave the Russian market, but expects to do so in a few months.

Naturally, we can't just stop working because there are contractual obligations. The company then simply will not pay off the lawsuits. The main thing is the transfer to partners or the transfer of project teams to clients, - said Loshchinin in an interview with NV Business.

Dmitry Loshchinin

According to him, after the start of the Russian special operation in Ukraine, Luxoft immediately decided to leave the Russian market. To begin with, the company will completely stop working with Russian clients - this is planned to be done by the end of April 2022, the head of Luxoft said.

Starting from July [2022 - approx. TAdviser] we will have no people, no offices, nothing in Russia. After that, the full exit from Russia will be completed. If we compare with other companies, we are probably moving the fastest here, - said Dmitry Loshchinin.

He noted that among 4 thousand Luxoft employees in Russia, about a quarter (1 thousand) of them work for foreign clients from Europe and the United States. The company is already transferring such external projects to other representative offices, and is trying to do this together with employees. Loshchinin admitted that it is "unrealistic" to transport everyone outside the Russian Federation. Those who agree to the relocation are transported by the company, and the rest of the staff for the projects are recruited at Luxoft development centers (by April 2022 there are more than 20 of them), Loshchinin said. He added that employees are transported in Europe, Asia and Latin America, "this process should end by the end of June 2022."

I say as it is - we are leaving. We will have neither financial nor any other ties with Russia. The whole business is transferred to other companies that are in no way affiliated with us, "he stressed.[2]

2020

Create Integrity Solutions to deploy Sberbank's cloud platform to the foreign market

On December 28, 2020, Sberbank announced to TAdviser that Luxoft had created an integrator company, Integrity Solutions, to implement Sberbank's Platform V digital platform in the foreign market. Read more here.

Purchase of technology testing provider for self-driving cars CMORE Automotive

On April 9, 2020, Luxoft announced the closure of the acquisition of CMORE Automotive. The financial side of the agreement was preferred to be kept secret by the company, as were its other terms. It is only noted that the deal was approved by regulatory authorities. Read more here.

2019

By the end of the 2010s, Luxoft became a major IT service provider with 42 offices in 21 countries, which took part in digital transformation projects for companies in the financial, energy, telecommunications, aviation and automotive industries.

Luxoft and LG Electronics have created a company to develop automotive technologies

In early January 2020, Luxoft and LG Electronics announced the creation of a joint company to develop and develop the webOS Auto platform and its further use in various automotive devices and systems. Read more here

DXC Technology bought Luxoft for $2 billion

On January 7, 2019, IT and consulting services provider DXC Technology announced the acquisition of Luxoft Holding to expand its portfolio of digital solutions for customers in the financial and automotive sectors. According to the terms of the deal, the main owners of Luxoft Anatoly Karachinsky and Sergey Matsotsky receive $655 million for their share.

Sales negotiations with potential buyers

For the first time, negotiations on its own sale of Luxoft began in the fall of 2017. The first potential buyer with whom Luxoft CEO Dmitry Loshchinin met was one of the unnamed clients of the company.

However, at first, the implementation of the transaction was prevented by organizational changes within the potential buyer. During 2018, Luxoft returned to negotiations with this structure several times, but the buyer was first ready only for a partial acquisition of the company, then for the acquisition of Luxoft's business without services for the financial sector.

However, the financial sector is the main sales industry for Luxoft services: in the 2018 financial year (ended March 31, 2018), this sector brought the company 56% of total revenue. The company's biggest customers American UBS are and. As a GermanDeutsche Bank result, negotiations with this buyer were unsuccessful.

In the spring and summer of 2018, Luxoft negotiated with two more potential buyers, one of whom expressed a serious intention to acquire the company. He is named Party B in the documents. Another potential buyer, after negotiations with Luxoft's chief operating officer Mikhail Fridland, realized that the future deal would be too big for him.

In September, a new contender for Luxoft appeared - this is the American public IT company DXC Technology. Dmitry Loshchinin was introduced to DXC Global CFO Paul Saleh by the CEO of one of Luxoft's oldest clients, who is also on the board of directors of DXC Technology.

The man's name has not been revealed. However, Sachin Lawande, CEO of automotive electronics manufacturer Visteon Corporation, who is a member of the board of directors of DXC Technology, fits this description.

Visteon Corporation, together with Luxoft, are part of the GENIVI global alliance for the development of automotive entertainment systems. Sachin Lavande repeatedly spoke the days of investor Luxoft, where Visteon was represented as a "good client" of the company.

After that, having secured the support of the chairman of the board of directors of Luxoft and the founder of the IBS group Anatoly Karachinsky, Loshchinin hired Credit Suisse as a financial adviser for a future transaction.

Since then, the fight for Luxoft has unfolded between DXC Technology and the unnamed Party B. With both of them, Luxoft has entered into non-disclosure agreements (NDAs) and granted them access to its electronic data room to conduct a due diligence process.

Party B was ready to acquire Luxoft based on the price of $62 per share, which was a 45% premium to market quotes Luxoft at the time of the offer, October 19, 2018. Of the total amount of the transaction, 65% was proposed to be paid in cash, 35% - in the form of buyer shares (apparently, Party B is also a public company). Party B obtained the consent of a major bank to fund the deal.

For its part, DXC Technology was ready to acquire Luxoft at a price of $55 - 60 per share, which was a premium of 35 - 47% of the market price of the shares at the time of receipt of the offer, November 13, 2018.

On November 14, 2018, Luxoft's board of directors met in London to discuss the future sale with its financial and legal advisers - Credit Suisse and White & Case, respectively. Credit Suisse has unveiled a list of ten companies that could potentially acquire Luxoft.

Of these companies, Luxoft tried to start negotiations with two structures. But one of them refused to acquire Luxoft. The second structure was ready to acquire a company with a premium of 30-40% to the market at the time of the relevant negotiations - December 5, 2018. That is, it was about a corridor of $42-45 per share, which is significantly less than the amounts offered to pay Party B and DXC Technology.

In December, Paul Saleh told Loschinin that DXC Technology was ready to buy Luxoft for $55 per share. Loschinin requested a big price. Saleh agreed to offer $59, and nothing more.

After that, legal adviser to DXC Technology, Latham & Watkins told White & Case, representing Luxoft, that the offer of purchase would only be made if DXC Technology was granted exclusive rights to discuss a future deal by Luxoft 2019. In addition, from Luxoft's controlling shareholder - IBS Group (owning 83% of Luxoft's votes) - demanded to sign an agreement to support this transaction.

Loschinin initially objected to granting exclusive rights to DXC Technology, but Saleh said there would be no further negotiations without it. Then Loschinin turned to representatives of Party B. But this company said that they were concerned about the volatility of Luxoft shares.

For example, on September 30, 2018, after the announcement of the results of the second financial quarter of Luxoft, the company's stock prices fell from $38.75 to $33.3. In this regard, representatives of Party B said that they could not confirm the relevance of their previous offer to buy Luxoft and they needed several more months to assess the market situation.

After that, Loschinin informed the board of directors of Luxoft that the only relevant offer to buy the company is an offer from DXC Technology. Anatoly Karachinsky announced the readiness of the IBS Group to support this proposal.

However, White & Case warned Luxoft's board that if IBS Group signed an agreement to support a future deal, the board would not be able to discuss other, better selling options for the company.

In addition, the legislation of the British Virgin Islands, where Luxoft is registered, allows minority shareholders of the company to express their disagreement with its takeover and receive compensation for their shares. DXC Technology indicated in its proposal that it could be withdrawn if more than a certain number of Luxoft shareholders exercise this right.

Board members generally supported the proposal of DXC Technology, but called a number of its conditions uncomfortable. In particular, it was about a long period of exclusive negotiations and the possibility of DXC Technology to break the deal due to the disagreement of a certain number of minority shareholders of Luxoft.

Loschinin informed Saleh of this position. After that, DXC Technology agreed to shorten the period of exclusivity of negotiations until January 11, 2019, and also refused the possibility of canceling the transaction due to disagreement of minority shareholders of Luxoft.

On January 5, 2019, the Luxoft Board of Directors reviewed this transaction again, after which an agreement was concluded on January 6.

Terms of the transaction

The value of the transaction amounted to about $2 billion, which in terms of one share Luxoft corresponds to $59. At the time of the announcement of the transaction, Luxoft shares were listed on the New York Stock Exchange at $31.7, that is, the premium amounted to 86% of the market price of the shares by the time the exchange closed on January 4, 2019. DXC Technology's share price remained unchanged.

The company, which will emerge from the merger of DXC Technology and Luxoft, will focus on digital solutions for customers from sectors such as insurance, finance and the auto industry

DXC Technology will pay for the acquisition from its own funds, that is, without attracting its shares to the transaction. All formalities regarding the sale of Luxoft are planned to be completed by June 2019. The company's brand will be retained, and CEO Dmitry Loshchinin will continue to lead Luxoft's business as part of the new owner.^[3]

The press release notes that the deal was approved by shareholders, who account for a total of 83% of the vote - this share is enough to conclude an agreement. The documents for Securities and Exchange Commission USA clarify that IBS Group Holding with its 83 percent stake in Luxoft approved the deal, and no permission from other shareholders is required.

The main owner of Luxoft shares - IBS Group (owned by Anatoly Karachinsky and Sergey Matsotsky) - will receive $655 million for its share. Luxoft CEO Dmitry Loshchinin will receive $60 million for his 5% stake.

Dmitry Loshchinin, as part of a top management incentive program, received rights to 393 thousand Luxoft shares (1.1% of the total number of shares). These rights will be exchanged for monetary compensation equivalent to the price of one share in this transaction - $23.3 million^[4].

In addition, Loschinin agreed to acquire shares of DXC Technology (they are also traded on the New York Stock Exchange) in the amount of $10 million. The disposal of these shares will be subject to restrictions that will end on the first and second anniversary after the closing of the transaction, subject to the continuation of Loshchinin's work at Luxoft.

For its part, DXC Technology will reward Loschinin with a similar stake in its own shares. The disposal of these shares will also be imposed restrictions that will expire on the third anniversary of the transaction, provided that Loschinin continues to work at Luxoft.

What rights did British Virgin Islands law grant to Luxoft shareholders?

Luxoft shares are divided into two types. Class "A" shares have one vote per security and are subject to free sale. Class "B" shares hold ten votes per security, but cannot be sold: they can only be converted to class "A" shares from a 1:1 ratio.

IBS Group is the sole owner of Class B shares. Its share is 83% of the total number of votes and 33% of the total number of shares. The size of the voting share of IBS Group allows the transaction to be carried out without holding a general meeting of Luxoft shareholders.

As already noted, another 5% of Luxoft shares belong to Dmitry Loshchinin. Loschinin entered into an agreement with DXC Technology that he would vote in support of any actions necessary to carry out the transaction between the companies.

Formally, the deal will be carried out by merging Luxoft with offshore Luna Equites, which DXC Technology specifically created in the British Virgin Islands. Following the takeover, Luna Equites would cease to exist and Luxoft would continue to exist as a separate entity.

As stated above, under the laws of the British Virgin Islands, Luxoft shareholders may express their disagreement with this transaction and receive compensation for their shares. The amount of compensation will be determined in accordance with the procedures established by law and has not yet been disclosed.

Luxoft warned its shareholders that the amount of compensation could be as much as the price that DXC Technology pays for the company's shares - $59 for one security - and significantly less. Loschinin and IBS Group have already announced that they will not use this right.

Guggenheim Securities and BofA Merrill Lynch acted as financial advisers to DXC Technology, while Luxoft was advised on financial matters by Credit Suisse.

The combined company will offer comprehensive global digital opportunities for the financial market, as well as new services in insurance and unique products for the automotive industry. Luxoft's knowledge and experience in the field of auto systems with cloud and information security capabilities of DXC Technology for vehicles with support for network interaction will be combined.

In the automotive industry, the combined company will serve more than 20 manufacturers and OEM customers in North America, Europe and the Asia-Pacific region, as well as half of the largest financial companies in Europe, the Americas.

2018

Morgan Stanley sells off Luxoft shares

The American investment company Morgan Stanley has left the shareholders of the offshore software developer Luxoft. This follows from the information posted on the website of the US Securities Commission (SEC)^[5].

Morgan Stanley became a shareholder of Luxoft in early 2017, collecting at that time a 7.3% stake in an offshore developer. But by the end of 2017, Morgan Stanley's stake in Luxoft fell to 2.5%. Now the American investment company has completely sold off its Luxoft shares.

Purchase of Objective Software

On August 7, 2018, Luxoft announced the acquisition of self-driving car software developer Objective Software at a price that they decided not to disclose. Read more here.

Buying Smashing Ideas

On June 18, 2018, Luxoft announced the purchase of Smashing Ideas from the world's largest publisher Penguin Random House, which has owned the creative agency since 2011. The financial component, as well as other terms of the agreement, is not disclosed. Read more here.

M&G Investment Management consolidates 3.8% stake in Luxoft

Offshore software developer Luxoft has a new major shareholder. According to the American Securities Commission, the British fund M&G Investment Management consolidated 3.8% of Luxoft. The market value of this block of shares at the moment is $58 million^[6] in^[7].

2017

Luxoft expands its presence in Russia and Germany

On August 14, Luxoft Holding, Inc. announced the opening of a development center in Nizhny Novgorod (Russia) and the move to a larger office in Braunschweig (Germany).^[8]

Luxoft's office in Nizhny Novgorod serves as a development center for all industries in which the company offers its services and solutions.

In turn, in the office in Braunschweig, the company develops solutions for one of the key industries of the company: the automotive industry. The location was incorporated into the global Luxoft development model following the acquisition of Braunschweig-based Symtavision in February 2016. Due to the increasing customer demand for technology consulting services and R&D development in the automotive industry, Luxoft was looking for a more spacious room, the company explained.

Our global development geography continues to expand due to the growing needs of Luxoft customers and the development of various areas of the company's activities. The expansion of our presence in Russia picks up the baton of Luxoft's business growth in Poland, Romania and other locations in Central and Eastern Europe. Our initial software development model continues to evolve into a much stronger, geographically distributed model. Its growth is achieved thanks to strategic actions outside Central and Eastern Europe, in Malaysia and Vietnam (Asia-Pacific), as well as in Mexico (North American), - said Dmitry Kushnir, vice president of Luxoft for global development centers.

Purchase of DerivIT for $18.3 million

On March 31, 2017, Luxoft announced the acquisition of DerivIT, a consulting company. The amount of the transaction is $18.3 million.

$1.4 million is placed on the account of a special escrow agent and, if certain conditions are met, will be transferred to sellers. The total amount of the transaction can grow to $20.7 million^[9].

Luxoft conducted this operation through its "daughter" Luxoft International Company. The sellers were individuals: Mukund V. Rao, Jothi Krishnan Menon Kazhakepanthapalil, Sagar Sinha, Naresh Kumar Malhotra (Naresh Pulpai Summud

Sellers and buyers exchanged guarantees, including the obligation of sellers not to compete with DerivIT or hire employees of this company within three years after the transaction.

Morgan Stanley buys Luxoft shares for $140 million

Investment firm Morgan Stanley has raised a 7% stake in offshore software developer Luxoft. This follows from the information posted on the website of the American Securities Commission (SEC)^[10].

Based on stock prices on the New York Stock Exchange, the market price of this block of shares is currently $138 million. The peak of quotes for Luxoft shares reached in November 2015 - $79 per share.

2016: Insys Company Purchase

In July 2016, Luxoft announced the purchase of Insys without disclosing the cost of the acquisition. More on the deal is written here.

2015

JPMorgan bought Luxoft shares for $75 million

JPMorgan Chase & Co has acquired a 4.5% stake in offshore software developer Luxoft. This is evidenced by the materials posted on the website of the American Price Commission. The market value of this block of shares at the moment is $75 million.

JPMorgan is one of the oldest American investment companies, counting its history since 1799. Now under its management are assets worth $2.4 trillion.

Subsidies from the Polish government

On November 11, 2015, it became known that the Polish authorities would provide Luxoft with subsidies for increasing the company's staff in the country. The Polish Foreign Investment Agency, which raises money in the country, promised to give Luxoft subsidies for each workplace until 2020.

Polish authorities will provide Luxoft with subsidies for increasing the company's staff in the country

By the end of September 2015, the company's staff in Poland exceeded 1200 people, while a year earlier the number of employees was measured by 600 employees. The share of Luxoft programmers in the country during this period increased to 15.5% from 5.5%. For more details see Luxoft Poland.

Collaboration with BlackBerry in the development of unmanned vehicles

In December 2015, Luxoft announced a strategic partnership with the Canadian manufacturer smartphones and. software BlackBerry Joint efforts of the company will develop solutions for self-driving cars.

As part of the partnership, Luxoft technologies that provide tracking of objects on the road and machine vision will work in conjunction with the BlackBerry QNX operating system.^[11]

An example of the Computer Vision and Augmented Reality platform: a virtual picture is projected onto the windshield for drivers to display the current speed, navigator prompts, etc.

In this initiative, Luxoft intends to use its Computer Vision and Augmented Reality (CVNAR) software platform to create augmented reality systems for vehicles. CVNAR is used, for example, in adaptive cruise control, navigation device, parking space search systems, as well as traffic sign recognition and markings.

This solution forms a visual picture that helps drivers in a particular situation, on the screen of the infotainment system, instrument panel or projection display on the windshield. After starting cooperation with BlackBerry, QNX will be able to display similar images.

According to Bloomberg, by merging, BlackBerry and Luxoft will work on semi-autonomous car control technologies like those used in Tesla electric cars. The company's first joint products are expected to be unveiled at CES 2016 (January 6-9, Las Vegas). At least this is hinted at by BlackBerry CEO John Chen.

According to him, at the international conference, BlackBerry will demonstrate advanced driver assistance systems. The head of the company refrained from any details.

John Chen also noted that he would like to partner with Google, Apple and Tesla Motors.

"In fact, our software platform fits into Apple's automotive strategy, as well as Google's. I would like to work with Tesla as well. Currently, our software is used in 60 million cars around the world, so it is obvious that participating in the development of a new generation of cars is a natural step for us, "John Chen said in an interview with Bloomberg TV

2014

Plan to transfer employees from Russia and Ukraine to other countries

In May 2014, it became known that Luxoft will transfer about 500 of its most experienced developers from Russia and Ukraine to other countries. Luxoft President Dmitry Loshchinin said this in an interview with Bloomberg. Employees will move to development centers in Bulgaria, Romania, Poland, and possibly Vietnam.

Loshchinin explained that this is the requirement of the company's customers. Which ones are not specified, but it is known that the two main customers of Luxoft are UBS and Deutsche Bank, which account for about half of the company's revenue.

However, Loshchinin added that the company already planned to redeploy its personnel. The long-term goal is to ensure that no more than 25% of the company's employees work in one country. The total number of Luxoft personnel exceeds 7 thousand people, about 2.75 thousand of them are in Ukraine, a little less than 2 thousand - in Russia.

At this time, the Ukrainian Luxoft development centers are located in Kyiv, Odessa and Dnepropetrovsk. At the end of March 2014, after the complication of the situation in this country, Luxoft reassured investors, noting that its Ukrainian units are far from regions where conflicts may arise, in particular, from Crimea and Donetsk region. However, clashes broke out in Odessa in early May, killing 40 people.

During a conference call with stock analysts in March 2014, Loschinin said: "We are not a Russian company. We are a global company with a head office in Zug, Switzerland ("We are not a Russian company. We are a global company with operating quarters in Zug, Switzerland^[12]

In the leadership of Luxoft, according to the general director, representatives of any one country do not dominate, and therefore possible sanctions of Western countries against Russia should not affect the company's business. For more protection, the company is moving its tax registration to the UK, and its head office has already moved to Switzerland.

Key top managers of the company, including Loschinin himself, now live in Switzerland. In the future, Luxoft intends to continue moving management (especially from Russia) to Western countries - in addition to Switzerland, they will be located in Germany, Great Britain and the USA. During the year, it is planned to transport several dozen managers.

Events in Ukraine negatively affected the attitude of investors towards post-Soviet offshore software developers. So, if in early February the quotes of Luxoft shares reached $44, then a sharp drop began and in early May the shares were already trading at $24 - that is, 40% cheaper. By the end of May 2014, quotes had already reached $30.

BNP Paribas invested in Luxoft

BNP Paribas Investment Partners consolidated at the end of 2014 about 4% of Luxoft shares. This is evidenced by materials from the website of the American Securities Commission. The market value of this block of shares is currently about $50 million^[13].

BNP Paribas Investment Partners was established in 2007 as an investment division of French bank BNP Paribas. The fund has a branch in Russia.

It also became known that the Fidelity Worldwide Investments fund (FWI, a legal entity - FIL limited) consolidated about 5% of Luxoft shares. The market price of this package is now $65 million.

The largest owner of FWI voting shares is Pandanus Partners, owned by American investor Edward Johnson III. He is also the head and main owner of another investment fund - Fidelity Management and Research (FMR).

If FMR accumulates funds of investors from North America, then FWI - from other regions (Europe, Asia, etc.). FMR also invested in Luxoft: at the beginning of 2014, the fund owned about 4% of the company's shares, although by the summer the size of this package had decreased to about 2%.

2013

NYSE IPO

IBS The Group announced in May 2013 that its subsidiary Luxoft (engaged in offshore development) ON has filed an application with USA the Securities and Exchange Commission for an initial Class A common stock offering. The number of shares planned to be placed and their price range has not yet been determined. IPO Luxoft will take place on the New York Stock Exchange (ticker symbol LXFT), the company said in a statement.

The bookrunners (keep a book of applications) of the placement are UBS Limited, Credit Suisse Securities, J.P. Morgan Securities, VTB Capital and Cowen and Company.

Information that Luxoft is preparing for an IPO in the United States appeared about a year ago. In addition to the New York Stock Exchange, a specialized exchange for high-tech NASDAQ companies was considered. However, the IBS itself did not confirm plans for the IPO at that time.

In 2012, Uralsib Capital analysts in their report noted that the fair value of IBS Group is $600 million, while 87% of this amount falls on Luxoft, and only 13% - on the system integrator.

The average profitability for EBITDA Luxoft in the period up to 2015, according to Uralsib Capital, will be 22.1%, while the same indicator in the IT services segment for the same period will be at the level of 6.5%. If Luxoft's listing is obtained, investors will be able to invest in the best part of the IBS Group business directly, analysts wrote.

In June, the company placed its shares at $17 per share and raised $69.6 million. All Luxoft was valued at $555 million. As part of the IPO, the company and its shareholders offered 4.92 million shares to investors.

June 26, 2013 on the New York Stock Exchange (NYSE) opened the first, after the initial public offering (IPO), trading in ordinary shares of Luxoft Holding, Inc. The stock is sold under the ticker symbol LXFT. J. Streicher & Co., LLC, has been appointed a marketer of Luxoft shares.

Luxoft President and CEO Dmitry Loshchinin and other representatives of the company's management celebrated the first day of exchange trading: Dmitry Loshchinin hit the bell of the New York Stock Exchange and visited the exchange floor to personally observe the opening of a new trading day.

Secondary placement: VTB sells its package

In November 2013, Luxoft announced a re-offering price (SPO) on the New York Stock Exchange. The price of one share was $34, which is slightly more than the previously announced maximum offering price of $33.78 per share.

The entire company was valued at $1.113 billion. This is twice as much as during Luxoft's IPO, which took place five months ago. Then one share cost $17, and the entire company was valued at $550 million.

During the SPO, 2.8 million shares were sold. The only seller was VTB-Capital, represented by its "daughter" Rus Lux. Having sold all of his 8.5% stake in Luxoft, VTB-Capital earned $95.2 million from this.

Luxoft securities are divided into two types: class "A" and class "B." One action of class "A" has one voice, class "B" - ten. At the same time, shares of class "B" are not intended for sale, for this they must first be converted into shares of class "A" at the rate of 1:1. This is what VTB-Capital did before selling its stake.

After VTB-Capital left Luxoft's share capital, the company had only two owners of B-class shares: this is the controlling shareholder of IBS Group (owns 83.4% of the total number of votes) and the company's general director Dmitry Loshchinin (5.7%). If the number of shares of class "B" becomes less than 10% of the total number of shares of all types, then all shares of class "B" will be automatically converted into shares of class "A." This will happen seven years after the IPO - that is, in the summer of 2020^[14]

Mobile Development and Automotive Solutions

In 2013, in the automotive technology industry, Luxoft specializes in innovative developments in four functional areas, driver assistance systems (ADAS), infotainment systems and on-board communication technologies. One of the most important competitive factors for developers of technologies for cars with access to network resources, the expert called the man-machine interface (HMI): "The main advantage of infotainment systems and, accordingly, the competitive advantage for their developers today is the convenience and functionality of the interface that gives the user access to infotainment materials while driving a car. Therefore, it is extremely important for modern developers to be able to create convenient, easy to use and easily updated multimedia user interfaces "(Gartner Tilo Kozlowski).

By this time, Luxoft has been involved in the formation of the automotive telematics and infotainment market for several years, collaborating with companies in these industries and the largest automakers. Luxoft is engaged in the creation of high-tech infotainment systems, specialized man-machine interfaces, as well as tools for 3D modeling on orders from leading automakers and suppliers of auto components. As the automotive infotainment and telematics market evolves, Luxoft engineers are exploring new possibilities for human-machine interaction, including the potential for intuitive gesture control of vehicle multimedia systems. In 2012, the Center for Research and Development was opened in Germany, specializing in the creation of human-machine interfaces. The area of ​ ​ activity of the new center in Filderstadt includes the development of platform technologies and user interfaces (UI) aimed at improving ergonomics, improving usability and reducing the number of distractions for the driver.

Luxoft's development in this area is iviLink, the only open automotive platform that ensures the successful connection of any mobile device to the car's multimedia systems and thus gives the company a serious advantage over competitors in this customer-oriented market.

2012

Start of exchange listing discussion

Luxoft's market valuation in the event of separation from the IBS Group and self-listing may be higher than the value of the entire group, analysts at Uralsib Capital (June 2012) say. They made this conclusion by examining the latest operating results of the company.

According to Uralsib Capital experts, Luxoft's listing could follow several scenarios, the most likely of which are two.

A fair option for minority shareholders is to spin off Luxoft into a new company whose share capital structure would repeat the allocation of stakes in IBS Group (adjusted for Luxoft's existing minority shareholders), and the market would be offered newly issued shares or a portion of controlling shareholder packages under such a scenario.

this case, IBS minority shareholders will retain investment in Luxoft's prospects and benefit by securing a stake in more liquid and attractive securities. This will turn out to be more than fair compensation for the decrease in liquidity of IBS shares, which, after the allocation of Luxoft, will be an investment exclusively in the Russian IT services sector. "

If such an option is chosen, Uralsib Capital analysts believe that it makes sense for IBS "to even delist its shares to reduce the costs associated with maintaining the status of a public company."

Also, IBS can place part of Luxoft shares (additional or from securities owned by current IBS shareholders) as part of an IPO in order to increase liquidity, and IBS will retain all or almost all of its stake in Luxoft. But such a scenario, according to analysts, is unprofitable for minority shareholders - their interests are not fully in the interests of controlling shareholders - and its implementation could lead to a decrease in the value of minority stakes in IBS Group.

VTB Capital acquired 10% in Luxoft

On July 3, 2012, it became known that VTB Capital acquired a minority stake in the developer of custom software Luxoft from its former owner. The seller bailed out about 5 times more for the asset than he paid for it three years ago.

The fact that VTB Capital bought a stake in Luxoft was told to Interfax by the head of the investment company Tim Demchenko. The fact of the transaction was confirmed by the representative of IBS Group (controlled by Luxoft) Evgeny Kutilov. According to him, VTB Capital bought Luxoft shares from the former owner, and IBS itself did not participate in the transaction. Kutilov did not disclose the details. He only suggested that the deal was beneficial for the fund, since he was part of the company at the peak of the economic crisis.

We are talking about about 10% of Luxoft shares, which the Swiss investment fund acquired in early 2009 from IBS (its name was not disclosed), two sources close to the holding say. Then this package was estimated at about $15 million, and the entire company - at $150 million. In fact, the amount of the transaction was less, and now the fund sold the asset almost 5 times more expensive than it bought, both Vedomosti interlocutors note^[15].

Demchenko from VTB Capital did not rule out that Luxoft is considering an IPO. He recalled that VTB Capital has experience in placing a software company Epam, similar in business model, on the stock market (its IPO took place in February 2012 at the NYSE, and bought a minority stake in VTB Capital in 2010). Demchenko did not name the timing of the placement. In March 2012, Reuters reported that the organizers of Luxoft's IPO could be UBS, JPMorgan, Deutsche Bank and Credit Suisse banks. In the near future, the IPO will not be due to unfavorable market conditions, says Luxoft CEO Dmitry Loshchinin.

Luxoft can be estimated using Epam multiples, whose capitalization is now about 8.5 forecast EBITDA for 2012, says Otkritie Capital analyst Alexander Vengranovich. With such a coefficient Luxoft (its EBITDA in 2012, Otkritie predicts at $70 million) can be estimated at $600 million, says Vengranovich.

It is actually difficult to evaluate Luxoft and compare it with Epam - its main shareholder reveals too few parameters for this, says Konstantin Belov, an analyst at Uralsib Capital. But in general, Luxoft's business looks quite promising: it can be assumed that it will grow annually by 25-30% over the next three to five years, maintaining a high (about 20%) profitability, he notes.

2011: Award from Frost & Sullivan

In September 2011, Luxoft announced that it had been awarded the Frost & Sullivan 2011 award for pioneering development strategies in the field of telematics and infotainment systems in Europe (European Telematics and Infotainment Competitive Strategy Innovation Award).

Frost & Sullivan awards are awarded to the best companies with a unique development strategy, a special market position and strong competitive positions. Luxoft has received an award for developing high-quality software for market leaders such as Harman, Elektrobit (EB) Wireless and NIS GLONASS, as well as for its extensive experience in developing, designing, testing and implementing new infotainment solutions for the automotive industry.

"Luxoft and its three main products - DroidBUZZ, DashCore and the upcoming solution in the field of interaction of distributed applications running on mobile and automotive devices at the same time - directly solve the main issues that currently exist in the European market for infotainment solutions for the automotive industry. This includes the need to provide a set of entertainment for passengers without distracting the driver's attention, the ability to display critical information on the dashboard, and the ease and security of integrating smartphones into the car's infotainment system, says Praveen Chandrasekhar, head of telematics, information and entertainment programs at Frost & Sullivan. "All these innovations suggest that Luxoft is responding quickly to the needs of the global automotive industry by developing superior technical solutions."

Luxoft's leading position in the market was also one of the main factors for awarding the company the 2011 Competitive Strategy Innovation Award in 2011. With a 40 percent increase in automotive profits in 2010 compared to 2009, Luxoft's competencies in first-class software development, as well as its wide range of services, are an important competitive advantage. Few companies can offer a similar level of competence, especially in the areas of navigation, entertainment for passengers, automotive audio management, telematics services, and the development of infotainment platforms based on Android and Linux.

"The automotive industry will soon reach a critical moment when the needs of customers to connect various devices inside the car will many times exceed the capabilities that car manufacturers can provide," said Dmitry Loshchinin, President and CEO of Luxoft. - Luxoft has made a lot of efforts to close this gap and become a strategic partner for manufacturers and suppliers of the automotive industry. By offering high-quality services that meet the needs of telematics and infotainment systems, companies can quickly develop, test and implement innovative solutions for the next generation of cars, including with support for constant Internet connectivity. "

2009: Sale of 10% of the company to a Swiss fund

In the summer of 2009, a 10% stake in Luxoft was acquired by a Swiss private fund for less than $15 million. The ultimate buyer was an individual close to Gazprom, says a top manager of one of the system integrators.

2008: Capitalization estimate of $150 million

2008 financial year, VTB Capital estimate with reference to IBS Group data: revenue - $121 million, EBITDA - $14.4 million. Capitalization: based on the purchase price of 10% by the Swiss - 100% Luxoft cost $150 million, including debt and about $100 million without debt.

2000: Building a Company

In 2000, IBS, in order to diversify its business, established Luxoft, a separate business structure for offshore software development, which soon became one of the world's largest software developers serving Boeing, Deutsche Bank, IBM, the US Department of Energy, as well as hundreds of other international customers.

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