The Hindu : Business : Satyam divests full stake in Sify

Online edition of India's National Newspaper
Friday, Nov 11, 2005

Business

Business

Satyam divests full stake in Sify

Special Correspondent

Sells stake to Infinity Capital for $63m

Vegesna to head Sify Infinity to pump additionally Rs. 172 cr. in Sify

CHENNAI: Satyam Computer Services has finally quit Nasdaq-listed Sify Ltd., an Internet, network and e-commerce services company.

Statyam has sold its entire stake of 31.61 per cent in Sify to Infinity Capital Ventures, LP, a company controlled by Silicon Valley entrepreneur, Raju Vegesna, at $5.60 per share. The deal fetches Satyam $62.6 million.

In an independent deal, Infinity Capital has also agreed to buy directly from Sify around 6.7 million newly issued shares at a purchase price of Rs. 256.09 (about $5.60) per share in cash. This will involve an additional investment of Rs. 172.10 crore (about $37 million at an exchange rate of Rs. 45.73). The direct buy from Sify is expected to be completed by the end of 2005.

New investors' stake

The sale of Satyam shares has been completed, says a release from Sify. In all, the new investors are expected to hold 40 per cent ownership in Sify eventually.

"Sify has done well to innovate and grow its businesses in Internet and network services in India. The company represents the right fit in terms of market opportunity, innovation and leadership in this fast growing market, and I am excited at the prospect of helping Sify realise its great potential,'' the release quoted Raju Vegesna as saying.

"Sify's existing core businesses provide a strong platform for future growth both organically and through possible acquisitions, growth that I hope to help enable with, among other things, the infusion of Rs. 172.10 crore in new capital, strategic inputs and assistance in developing alliances with other innovators in this space,'' Mr. Vegesna said.

Satyam's divestment was in line with its stated objective to emerge as a pure play IT services and solutions company.

As against its original investment of $5 million in Sify, Satyam has received a total consideration of about $117 million till date, making it a highly successful and value creating investment for Satyam's shareholders.

Strong relationship

R. Ramaraj, Managing Director and Chief Executive Officer, Sify, said, "We have always enjoyed a strong supportive relationship with Satyam. We are particularly happy that Satyam is divesting to a strategic investor with a long-term interest in Sify's growth and future. We look forward to working closely with Mr. Raju Vegesna to build on Sify's track record of growth, quality standards and innovative services, and to continue to lead the market in India and internationally." According to Mr. Ramaraj, other financial investors who entered Sify by picking up part stake of Satyam earlier had all moved out a year ago.

Sify has zero debt and will have cash on hand of about Rs. 286.30 crore (about $62 million at an exchange rate of Rs. 45.73) post-capital infusion. With this additional investment of Rs. 172.10 crore, Sofy's equity base will expand by 6.7 million shares for a total of 44.8 million shares on a fully diluted basis, including stock options outstanding.

Following the deal, Mr. Vegesna will become the Chairman of the company.

Printer friendly page
Send this article to Friends by E-Mail

Business

News Update

Stories in this Section