Nalanda Capital sells entire 10.61% stake in Mindtree to L&T; paves way for construction major to increase its stake to over 51%

Pulak Prasad led-Nalanda Capital sold its whole stake worth Rs 1,707.46 crore to L&T in an ongoing open offer for shareholders of Mindtree

FP Staff June 25, 2019 11:04:47 IST
Nalanda Capital sells entire 10.61% stake in Mindtree to L&T; paves way for construction major to increase its stake to over 51%
  • Ontario Teachers’ Pension Plan Board has also reportedly offloaded its stake in Mindtree

  • Last week, Securities and Exchange Board of India’s (SEBI) had issued a show-cause notice to Nalanda

  • Nalanda had asked some other institutional shareholders of Mindtree to push L&T to pay a better price for the IT services company

Singapore-based Nalanda Capital has reportedly sold its entire 10.61 percent stake in Mindtree to Larsen & Toubro (L&T), paving the way for the construction major to increase its stake to over 51 percent in the Bengaluru-based IT firm, a media report said.

According to Mint, Pulak Prasad led-Nalanda Capital sold its entire stake worth  Rs 1,707.46 crore to L&T in an ongoing open offer for shareholders of Mindtree.

Citing multiple sources, Business Standard said Singapore-based Arohi Asset Management, which manages Ontario Teachers’ Pension Plan Board’s stake of 1.22 percent, has also offloaded its stake in Mindtree.

Last week, Securities and Exchange Board of India’s (SEBI) had issued a show-cause notice to Nalanda for pressing Mindtree’s public shareholders to refrain from tendering shares to L&T at Rs 980 per share in the open offer.  Mindtree’s investors had accused Nalanda Capital of attempting to prevent Mindtree shareholders from selling shares to L&T in the open offer.

According to The Times of IndiaNalanda had asked some other institutional shareholders of Mindtree to push L&T to pay a better price (more than Rs 980 apiece) for the IT services company.

Nalanda Capital sells entire 1061 stake in Mindtree to LT paves way for construction major to increase its stake to over 51

Representational image. Reuters.

As L&T continues to tighten its grip on Mindtree, the construction major is likely to push for management rejig at the Bengaluru-based IT firm, according to another Times of India report. L&T might even ask a change of CEO, the report added. “The move to name a new CEO will gather momentum now,” people directly aware of the situation were quoted as saying by the newspaper.

The Bengaluru-based company described construction major L&T's unsolicited bid to acquire a majority holding in the IT firm as an "unusual situation" and said it is fully committed to "handling this issue in a manner that maximises value for all our stakeholders".

Chairman Krishnakumar Natarajan and CEO Rostow Ravanan, in their message to shareholders in the company's annual report filed with BSE last week, noted that the L&T matter was pending regulatory approvals at the time of penning the message.

The two top officials said the company is focussed on capitalising on the opportunities and maintaining high-growth trajectory, growing faster than the industry.

"Although the external environment presents a slightly worrisome picture–global trade wars, increasing risk of terrorism disrupting people's lives, slowing economic growth, and political uncertainty–we are confident that we are better prepared to handle these uncertainties than ever before.

"We estimate that we will deliver a low-teen growth rate in FY20, along with a margin expansion of 100-120 bps," they said.

In March, L&T had said it will buy 20.32 percent stake in Mindtree from VG Siddhartha and his coffee enterprise for over Rs 3,000 crore-marking India's first-ever hostile takeover bid in the IT space.

Since then, L&T has steadily increased its holding in Mindtree to about 30 percent. It is currently in the process of an open offer to buy an additional 31 percent stake. In all, the infrastructure major is eyeing about 66 percent stake in Mindtree for over Rs 10,700 crore.

L&T has also secured three board positions at the IT services firm. In a BSE filing on 20 June, Mindtree said L&T CEO and MD SN Subrahmanyan will join its Board as Non-Executive Director with effect from 16 July when Mindtree is scheduled to hold its annual general meeting (AGM).

With PTI inputs

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