American telecom giant AT&T appears to have generated a 4.5x return on its investment in Tech Mahindra by selling all of its 8% stake in the IT services firm. Although details of whether AT&T has indeed sold its stake is yet to be made public, as per trading volumes of the scrip, it could well have exited with a princely return.
AT&T had picked the shares for around Rs 160 crore or about Rs 162 a share just last month. On the face of it, this could well be the biggest and most profitable exit in recent times in such a short period (~60x annualised). However, the catch is that the share purchase was as per an option granted five years ago or before the IPO of the company.
The shares were owned by an investment entity which was a promoter group firm till December and came to be owned by AT&T in March when the US firm exercised its option.
Over 10 million shares of the company changed hands on Wednesday, more than ten times the average in the recent past. The shares which dropped 4% today could have generated as much as Rs 770 crore for AT&T as against its cost of around Rs 160 crore.
Tech Mahindra, which snapped up accounting scam-hit Satyam Computers in 2009, is co promoted by Mahindra & Mahindra and British Telecom. AT&T is one of the IT clients of the firm. The option to buy the stake was contingent to Tech Mahindra achieving certain targeted revenues from IT contracts from AT&T. Given the neat sum of money netted by AT&T, it could well have encashed a large chunk of money paid for its IT services.
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