Financial services firm Polaris Financial Technology, on Tuesday, formally announced the demerger of its product business into an independent entity after receiving approval from the company’s board.

The announcement puts an end to a nearly year-long restructuring process — which was undertaken to ‘unlock value’ — and will see the creation of a new entity known as Intellect Design Arena Ltd (Intellect).

Shares of the company surged nearly 11.6 per cent to end at Rs.152.8 on the BSE after news of the demerger broke.

According to a stock exchange filing, Intellect will now comprise four distinct businesses — global universal banking, risk and treasury management, global transaction banking and insurance. As part of the demerger, every Polaris shareholder will now receive one share of Intellect. Polaris will continue to run the services business with a strong vertical and solution focus. “Yes it has taken some time from when we decided to demerge and the official announcement. This is because we wanted to restructure properly first, with our employees having the chance to choose what career path they wanted to take,” said Arun Jain, Executive Chairman, Polaris Financial Technlogy Ltd.

“Close to 45 new leadership positions have now been created in the mid to senior level management. 28 of those positions have been filled externally,” he added.

The Polaris board has also decided to offer a special option to the shareholders of Intellect to exchange the shares (should they wish to) allotted pursuant to the demerger against fully secured non-convertible debentures (NCD).

According to Mr. Jain, the demerger will now allow the services business to start partnering with third-party solution providers in addition to Intellect. “Both companies will now have full freedom to start growing. The cloud business, which is part of Intellect, still needs sometime to mature before we decide anything on that,” he said.

Polaris Holdings Pvt. Ltd., whose name has been changed to Polaris Banyan Holding Pvt. Ltd., will continue to be the promoter of both the companies. Both companies, therefore, will operate as Polaris Group Companies, each with its independent management team and board of directors.

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