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Patni brothers may sell stake at Rs 675-700

Monday, September 3, 2007

Two of the three brothers of Patni Computer Systems (PCS) have kickstarted the process to offload a large chunk of their promoter stake to a private-equity investor. Due diligence is expected to begin in less than a fortnight, sources said.

The Patni brothers, Ashok and Gajendra, may sell their stake at around Rs 675-700. The valuation is believed to be in the region of $ 715 million. Avendus Advisors and Ambit are the investment bankers to the deal. The third brother, Narendra Patni, the chairman and face of the company, will retain his stake. Narendra is credited with having built the company from scratch and is expected to retain his 14% stake with certain rights as promoter of the company.

Together, the three control 43.97% of Patni Computers. Of this, the 29% owned by Ashok and Gajendra is on sale. Sources aver that the Texas Pacific Group and Apax Partners are the favourites to bag the 29% stake. The two heavyweight private-equity investors, Blackstone group and Carlyle, which are also in the race, are unlikely to go the full distance to bag a stake in the company.

Due diligence is expected to begin on Thursday. Sources said that the company may actually kickstart due diligence a week later, which is after September 10.

Patni Computer Systems shares were on Friday trading at Rs 526.75 on the BSE, up 2.63% from the previous close. The stock has gained over 18.19% in the past one week on media reports that Apax Partners and Cerberus PE may pick up 45% in the company. “If Patni Computer crosses Rs 520, the next target would be Rs 554 and then Rs 640. Logically, if an open offer is made at Rs 700 then market price would settle 10-15% below the offer price,” said Anil Manghnani, Modern Shares & Stock Brokers.

Posted by FR at 9:13 AM  

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