Sobha Developers Chairman PNC Menon is exiting the decade-old investments in IT services, which is parked in a standalone entity, Sobha Renaissance IT (SRIT). The Bangalore-headquartered SRIT, with an annualised revenue run rate of Rs 140 crore, is being carved out for strategic sales with Religare Technova close to snapping up the healthcare solutions business.
With this move, Mr Menon will be unlocking the non-core investments after his mainstay real estate development business came through a difficult phase in the economic slump.
Religare Technova, the holding company for IT business of the diversified Religare Group, will pay between Rs 20 crore and Rs 25 crore, for acquiring the healthcare services part of SRIT, said banking sources with direct knowledge of the development. The initial healthcare deal could be unveiled as early as this week. The healthcare business accounts for 15% of SRIT's annual revenue.
Telecom, healthcare and enterprise are the three large domains of SRIT's services play with nearly 500 employees on its rolls. Currently, discussions are on with other suitors for the sale of telecom and enterprise businesses either in a single transaction or by way of two separate deals. A reverse merger with a smaller services firm is one of the options being considered, with the current management at SRIT leading the combined entity.
Investment banking sources said, Religare Technova has been on the prowl for IT services and BPO acquisitions. SRIT has been working with a few investment banks, including US-based Mooreland Partners, for a possible structured sale of the company. When contacted, a Religare spokesperson declined to comment. An e-mail sent to SRIT co-founder and CEO Dr Madhu Nambiar elicited no response at the time of filing this story.
SRIT had accumulated debt of around Rs 140 crore thanks to several (four) small buyouts, supported by personal guarantees from Mr Menon, at the height of the liquidity boom (2006-07). The most high profile of its four acquisitions was the buyout of Objective Systems Integrators, Inc, a global supplier of telecom operations support systems, from Agilent Technologies.
It is understood that Sobha Developers holds around 20% stake in the entity with Mr Menon holding stake in his personal capacity along with a few other investors. SRIT management headed by Founder CEO Madhu Nambiar also holds a minority stake in the firm, which figured in Deloitte's 50 fastest growing Asian enterprises in 2007.
Dr Nambiar had joined hands with Sobha's Menon to set up IT services business focused on telecom and healthcare nearly a decade back.
Sources said, Mr Menon wanted to be relieved of the personal guarantees executed for the IT business, which was non-core to the real estate operations. Mr Menon's flagship Sobha Developers went through a turmoil in the last 18 months, as the real estate market collapsed in the aftermath of the global financial crisis. However, Sobha Developers appears to have recouped with the buyer sentiments improving and sale of residential units beginning to pick up once again.
The Sobha stock touched Rs 316.45 on the BSE today, up 3.44% while Religare Technova stock closed at Rs 88, down 2.22%.