The Patni brothers are likely to offload a large chunk of their combined stake in Patni Computer Systems, while private equity firm General Atlantic plans to sell its entire holding in the software company to Japanese systems integrator NTT Data, according to people with knowledge of the matter.
The three brothers, who together hold 46.5%, are expected to retain a combined 10% stake in the firm. Ashok Kumar Patni holds around 15.5%, Gajendra Kumar Patni owns 15% and Narendra Kumar Patni has 16% stake in the company. General Atlantic, which holds 17.7% in Patni Computer, will sell its entire stake, said an investment banker requesting anonymity.
“The talks are progressing well and are at a fairly advanced stage. The way the deal is envisaged currently, General Atlantic will sell its entire stake in Patni Computer, but the brothers could continue to individually retain a small or token percentage,” he said. NTT is likely to pay between Rs 650 and Rs 700 per share for a controlling stake of 51% in the company, said another person with knowledge of the transaction. With General Atlantic’s 17.7% stake and 33% from the Patni brothers, NTT stands to acquire a 51% stake in the firm. A Patni Computer spokesperson said: “We do not comment on market speculation.”
Shares of Patni surged 10% to Rs 623.90 before closing at a new high of Rs 608.60 on the BSE on Wednesday. The transaction, if it goes through, will be one of the largest in the history of the software industry in India, valued at nearly Rs 4,300 crore to Rs 4,600 crore. It will also result in an open offer for the shareholders of the company.
For General Atlantic, this will be one of its first exits from the investments it made in the early part of the decade in a number of outsourcing providers. ET was the first to report that talks had re-started between NTT and the stakeolders in Patni Computer in early April. It was also the first to report of differences between the Patni brothers way back in 2005 with two of the brothers, Ashok Patni and Gajendra Patni, wanting to sell out.
This will be the first time a Japanese systems integrator is getting such a significant footprint in India, allowing it to better compete with the likes of IBM and Accenture. “Japanese IT service vendors have a relatively lower exposure to offshore resources as compared to American and European majors.
In this context, NTT’s interest to acquire a stake in Patni is driven by the aim to partake greater exposure to offshore supply base and correct the lopsided onsite offshore ratio that NTT currently posses,” said Alok Shende, principal analyst, Ascentius Consulting. “This investment equally reflects a greater legitimisation of offshoring as a strategic trend in the traditionally conservative Japanese firms and this will in turn attract other Japanese IT services vendor to acquire IT services companies in India,” he added. Since 2005, there have been several attempts to sell stake in Patni Computer Systems.
Last year, after a long search, the company was eventually able to hire a professional CEO, Jeya Kumar, a former Sun Microsystems executive, paving way for fresh negotiations with potential buyers.
Unlike five years ago, Narendra Patni, who is no longer actively involved in the management of the company, is also selling.
Source:http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/Patni-promoters-PE-co-plan-to-sell-stake-to-Japans-NTT/articleshow/5895722.cms
