Financial Daily from THE HINDU group of publications
Friday, Nov 11, 2005
Corporate - Mergers & Acquisitions
Info-Tech - Software
Satyam exits Sify; entire stake sold to Infinity Capital of US for $62.62 m
Chennai , Nov 10
SATYAM Computer Services has sold its entire stake in Sify Ltd to the US-based Infinity Capital Venture, LP, which is controlled by Silicon Valley entrepreneur, Mr Raju Vegesna.
The total purchase price for Satyam's 31.61 per cent stake was $62.62 million (Rs 286.23 crore), says a press release issued by Sify.
In a separate transaction, Infinity will purchase from Sify 6.7 million newly issued shares at a purchase price $5.60 per share in cash. The closing of this purchase, representing an additional investment $37 million, is expected take place in late 2005 after stockholder and regulatory approvals. The sale of the Satyam shares has been completed and is not contingent on the Sify issuance. The total position will represent approximately a 40 per cent ownership interest in Sify, according to the release.
Sify agreed to appoint Mr Vegesna as Chairman, and an additional person to be designated by him to its board of directors.
Mr B. Ramalinga Raju, Chairman, Satyam Computer, in a statement said the move would enable Satyam to further focus on its core business and unlock the value of its investment. This is in line with its objective to emerge as pure play IT services and solutions company. As against its original investment of $5 million in Sify in 1995, Satyam received a total consideration of $117 million till date, making it a value creating investment for Satyam's shareholders, Mr Raju said.
Mr Vegesna said, "I am excited at the prospect of helping Sify realise its great potential by building upon its market-leading iWay cyber cafe and Enterprise Solutions business segments while further exploiting Sify's expertise in Internet and network technologies."
"Sify's core businesses provide a strong platform for future growth both organically and through possible acquisitions -- growth that I hope to help enable with, among other things, the infusion of $37 million in new capital, strategic inputs and assistance in developing alliances with other innovators in this space. Among other things, these contributions should help Sify leverage its expertise and experience into new business opportunities by supporting the company's efforts to expand its international operations," he said.
According to Mr R. Ramaraj, MD and CEO, Sify, "We are happy that Satyam is divesting to a strategic investor with a long term interest in Sify's growth and future."
Sify has zero debt and will have cash on hand of about $62 million post infusion. With this additional investment, Sify's equity base will expand by 6.7 million shares for a total of 44.8 million shares on a fully diluted basis, including stock options outstanding, says the release.
Satyam's shares closed at Rs 630.35 on the BSE on Thursday, down from Rs 636.90 on Wednesday.
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