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July
26,
2007
Genpact
Limited
Registration
Statement on Form S-1
Filed
May 11, 2007
File
No. 333-142875
Dear
Mr.
Woody:
We
refer
to the letter of July 10, 2007 (the “July 10 SEC Letter”) from the U.S.
Securities and Exchange Commission (the “SEC”) to Genpact Limited (“Genpact
Limited” or the “Company”) setting forth the comments of the staff of the SEC
(the “Staff”) on the Company’s Registration Statement on Form S-1 File No.
333-142875 filed on May 11, 2007 and Amendment No. 1 to the Company’s
Registration Statement on Form S-1 filed on July 3, 2007 (and together with
Amendment No. 2 to the Company’s Registration Statement on Form S-1 filed on
July 16, 2007 and Amendment No. 3 to the Company’s Registration Statement on
Form S-1 filed on July 20, 2007, the “Registration Statement”) along with the
Company’s response letter dated July 16, 2007 and the Company’s telephone
conversation with the Staff on July 25, 2007 (the “July 25 Call”). We
are providing this response on behalf of the Company, which is based on
information provided by the Company.
As
requested by Staff on the July 25 Call, the response provided below sets
forth
the basis for the Company’s conclusion that the 2007 Reorganization should be
accounted for at the carrying value of the assets and liabilities prior to
the
reorganization.
Response:
The Company notes that paragraph 11 of SFAS No. 141, Business Combinations,
provides that the term business combination excludes exchanges of equity
interests between entities under common control. SFAS No. 141
provides examples of transactions that qualify as transactions between entities
under common control. Genpact Limited is a newly formed entity and the
2007 Reorganization is synonymous with the example in paragraph D-11a. The
Company further notes that EITF 02-5, Definition of “Common Control” in relation
to FASB Statement No. 141 provides the SEC staff’s views that common control
exists only in the situations listed in paragraphs 3(a) to 3(c) of EITF
02-5.
The
Company believes that as Genpact Investment Co (Lux) SICAR S.à.r.l. (“GICo”)
held 63.2% of the ownership interest in the business of Genpact Global Holdings
SICAR S.à.r.l. (“GGH”) prior to the 2007 Reorganization and continues to hold
63.2% of the ownership interest in the business (now transferred to and
represented by Genpact Limited) after the 2007 Reorganization, the transaction
qualifies as a transaction between entities under common control as contemplated
in paragraph 3(a) of EITF 02-5 as an enterprise holds more than 50% of the
voting ownership interest of both GGH and Genpact Limited.
While
the
Company believes that the majority voting interest held by GICo, which is
a
separate legal entity, adequately demonstrates common control, even if one
‘looks-through’ GICo and evaluates the relationship between the shareholders of
GICo, common control exists as contemplated in paragraph 3(c) of EITF
02-5. In the current situation, General Atlantic and Oak Hill, which
together own approximately 100% of the voting ownership interest of GICo
(and
thus effectively own 62.3% of the business), have a written agreement to
vote
their voting interest and exercise control in concert.
Lastly,
the Company acknowledges that as a part of the 2007 Reorganization, the
ownership interest held by the minority shareholders in GGH were exchanged
for
shares issued by Genpact Limited. FASB Technical Bulletin (“FTB”) No.
85-5, Issues Relating to Accounting for Business Combinations, provides guidance
on the accounting implications if the minority shareholders are a party to
the
exchange of shares. Paragraph 6 of FTB 85-5 provides that if the
shares held by the minority shareholders are exchanged, the exchange should
either be recorded by the purchase method under paragraph 14 of SFAS No.
141 or
at carrying values prior to the exchange, depending on the substance of the
transaction. Paragraph 6 further specifies that if the exchange lacks
substance, it is not a purchase event and should be recorded at the existing
carrying amounts.
As
an
example, FTB 85-5 provides that if the minority interest does not change
and if
in substance the only assets of the combined entity after the exchange are
those
of the partially owned entity prior to the exchange, a change in ownership
interest has not taken place, and the exchange should be accounted for based
on
the carrying amounts of the assets and liabilities prior to the
exchange. The Company believes that the current situation is similar
to this example in FTB 85-5. In the current situation, the ownership
interest held by the minority shareholders remains unchanged at 36.8% prior
to
and after the exchange. Additionally, the only asset of Genpact
Limited represents its ownership interest in GGH and thus the business of
Genpact Limited represents the business of GGH. Thus, based on the
guidance in paragraph 6 of FTB 85-5, the Company has concluded that the exchange
lacks substance, is not a purchase event and accordingly should be recorded
at
the carrying values.
____________
Please
contact the undersigned at (212) 474-1154, or, in my absence, Michael Clayton
at
(212) 474-1754, with any questions you may have regarding the Registration
Statement.
Sincerely,
Timothy
G. Massad
Mr.
Kevin
Woody
Accounting
Branch Chief
Division
of Corporation Finance
Securities
and Exchange Commission
100
F
Street, N.E.
Washington,
D.C. 20549
With
a
copy to:
Mr.
Robert Telewicz
Staff
Accountant
Division
of Corporation Finance
Securities
and Exchange Commission
100
F
Street, N.E.
Washington,
D.C. 20549
Mr.
Paul
Dudek
Office
of
International Corporate Finance
Division
of Corporation Finance
Securities
and Exchange Commission
100
F
Street, N.E.
Washington,
D.C. 20549
Mr.
Vivek
Gour
Chief
Financial Officer
Genpact
DLF
City
- Phase V
Sector
53, Gurgaon
Haryana
State 122002
INDIA
Mr.
Victor F. Guaglianone
Senior
Vice President and General Counsel
Genpact
1251
Avenue of the Americas
41st
Floor
New
York,
NY 10020-1104
Mr.
Rakesh Dewan
Partner
KPMG
4B,
DLF Corporate
Park
DLF City,
Phase III
Gurgaon
122 002
INDIA