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Carlyle, Advent To Team Up For Patni Stake Sale

24 November, 2010

India’s Patni Computeris a step closer to selling a majority stake for nearly $1 billion after years of talks, as private equity firms Carlyle and Advent plan to jointly bid for the stake in two weeks, sources said on Tuesday.

Private equity firm Apax and Japanese technology company Hitachi are also likely to team up to bid for the 63-percent stake, which is owned by General Atlantic and founders of Patni, said the three sources with direct knowledge of the matter.

Bids are expected to come in at 500 rupees to 550 rupees a share, the sources said, valuing the stake at 45.43 billion rupees ($996 million) at the top of the range, a premium of 16 percent over Patni’s stock price on Tuesday.

Talks to sell a stake in the software services exporter have been going on for about two years, but Patni has failed to seal a deal due to valuation gaps with potential buyers, the sources said.

“The private equity companies are further along in talks for this deal than any strategic buyer,” one of the sources told Reuters. “If everything goes well, we should be able to close this deal in about a month’s time.”

The founding Patni brothers are looking to sell their 46 percent stake while private equity firm General Atlantic plans to sell its roughly 17 percent holding, the sources said.

Private equity activity is surging in India, with $6.57 billion invested in the first three quarters of 2010, more than double the $2.5 billion invested during the same period last year, according to Venture Intelligence, a research firm.

Private equity firms typically make minority investments in India, where entrepreneurs are often reluctant to sell out and where full buyouts are rare.

Local media had earlier reported that private equity firms including Apax and Providence Equity had shown interest in buying BT Group’s stake in Tech Mahindra that is likely to be valued at $830 million.

Patni, a mid-sized IT services firm also listed in New York, provides technology outsourcing services to industries such as insurance, telecom, utilities and retail.

Small and mid-cap Indian IT companies have been grappling with tepid demand, high attrition rates and a rise in expenses, resulting in reduced profitability for some.

Patni declined comment on the talks. Officials at Hitachi, and the private equity companies were not immediately available for comment.


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Carlyle, Advent To Team Up For Patni Stake Sale

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