Just a few days after Spice Corp pulled out of the Satyam bidding process, it is now reported that US based private equity firm WL Ross & Co could also be one of the firms interested in buying a majority stake in the fraud hit Satyam Computer Services. Though the reports haven’t been confirmed, Hindu Business Line reports that representatives from WL Ross & Co recently visited Satyam’s headquarters in Hyderabad to start due diligence process. They even examined the books and assets of the firm, the report mentions.
It is speculated that private equity firms bidding for the stake in Satyam will typically partner with IT companies. This also means that WL Ross can also be expected to tie up with an IT player during the bidding process. The government appointed board of Satyam has already laid emphasis on the bidder's capability to manage an IT firm of the scale and complexity of Satyam. WL Ross, though known for turning around distressed firms, has little experience in managing IT firms.
Reports also suggest that four suitors have already completed their due diligence of Satyam, while two more are expected to conclude the due diligence. The Economic Times reports that Wilbur Ross, Larsen & Toubro, Tech Mahindra and another IT firm have done the due diligence.
The government appointed Satyam board had shortlisted 8 bidders who had submitted EoIs for acquiring a majority stake in Satyam. The list also included BK Modi’s Spice Corp, which backed out last week citing lack of transparency in the bidding process. The Spice group had also floated an SPV to bid for the stake, called Spice Innovation Technologies (SIT).
ET also reports the possibility of another bidder pulling out of race, leaving six qualified bidders in the race.
Satyam board is expected to sell the IT giant by mid April. However, lack of clarity on the firm’s accounts its true financial position can discourage other potential buyers too. While, KPMG and Deloitte are preparing accounts for Satyam, the restated accounts would only be available in about six months from now, much after the sale of the firm.