Apollo to offload 15% for $70 mn

Apollo Health Street (AHS), the healthcare business process outsourcing subsidiary of Apollo Group that runs India’s largest hospital chain, plans to raise $70 million from the capital market by offloading 15% of its equity. The Hyderabad-based company has been valued at nearly $470 million. The company will come out with its initial public offer (IPO) in the first quarter of 2008.

AHS is also looking to get outsourcing contracts worth several millions of dollars from private equity player Apax Partners, which runs 45 hospitals in Europe. Apax Partners picked 11% stake in parent company Apollo Hospital Enterprises for $100 million last month.

Read more in The Economic Times article.

Patni stake sale stalled

Mumbai-based Patni Computer System’s stake sale has been stalled, perhaps indefinitely, according to sources close to the development.

The reason for the delay has been attributed to a lack of “common meeting ground” between the brothers. “While the two brothers kick-started the stake sale, they now do not want to dilute their entire stake in the company and want to continue having some rights and privileges in the company,” said the source.

It has been rumoured that private equity players such as the Texas Pacific Group and Apax Partners were in the final lap of purchasing the shares of the two Patni brothers and that due diligence was in progress.

The two Patni brothers — Ashok and Gajendra — who want to sell their stake, together own about 29 per cent stake in the company, which is the country’s sixth largest IT services company. While General Atlantic Partners, which holds a 16.38 per cent stake in the company, has no plans to exit in the immediate future, as a financial investor, it will consider a stake sale if the price is attractive. Other institutions holding stake in the company include Merrill Lynch and UBS. However, any stake sale will be possible only after receiving Narendra Patni’s consent since he has the first right of refusal. Sources said that even if Narendra Patni did agree to a stake sale by his brothers, he was unwilling to give up control over the company.

Read more in The Business Standard article.

PE Texas, Apax to buy stake in Patni

Private equity firms Texas Pacific Group and Apax Partners are close to buying some of the founders' stake in India's Patni Computer Systems Ltd.Gajendra and Ashok Patni, two of the three brothers who founded the software services firm, are looking to sell their stake, local media had earlier reported.

Their holding in the company totals to about 29 per cent. The agreement between one of the private equity partners and the Patni brothers is likely to be signed next month, the media said.

A spokeswoman for New York-listed Patni, which counts General Electric Co and ABN AMRO among its clients, said the company had no comment to make on the report. Chairman and Chief Executive Narendra Patni, who holds about 15 per cent of the company, will buy out a part of the stake on offer while the private equity firms will pick up the remaining, the daily said.

Patni nears $25 mn European buy

IT major Patni Computer Systems is close to acquiring a European IT company for $20-25 million (around Rs 100 crore) and is expected to announce the deal in the next two months.

The acquisition gains importance as two private equity majors – Apax and Carlyle – are in advanced stages of discussion to acquire a 20 per cent stake in the Indian IT major from two of its largest shareholders — Ashok Kumar Patni and Gajendra Kumar Patni — who together own about 29 per cent.

According to sources close to the development, Patni has finalised the takeover of a European company operating in the media and telecom space, whose name is still under wraps. The acquisition is on a minus 45-day period (means would close in 45 days) and a subsequent announcement will be made.

Earlier in June 2006, the company acquired US-based ZAiQ Technologies, an application specific integrated service (ASIC) design firm in an asset purchase transaction of $425,000.

Read more in The Business Standard article.

Carlyle, Apax join race for Patni stake

A clutch of top private equity guns, including Carlyle and Apax Partners, have shown interest in buying a large stake in Patni Computers, but the success of their venture depends on whether they can win crucial management rights and also secure the co-operation of Narendra Patni, the CEO and chairman.
Mr Patni, who is believed to be interested in continuing in his position after the exit of his brothers, has employment contracts that protect his interests till 2013.

According to the prospectus filed with the Securities and Exchange Commission (SEC) prior to its ADR issue on the NYSE, Mr Patni’s (Narendra) term as the chairman of the board of directors of his company ends in December 2008. However, he still has the option to continue for another 5 years in the same position in Patni Computers. Also, since Mr Patni’s consultancy agreement has been extended by the board of directors, he would also be able to continue as the CEO of the company till 2010. This is crucial to any new investor for the company, as they then would have to strike some kind of a compromise with Mr Patni in order to run the company.

Read more in The Economic Times article.

2 Patni siblings may sell 20% for Rs 1,750 cr

Two Patni brothers — Ashok and Gajendra — who together own about 29 per cent stake in Patni Computers, the country’s sixth largest IT services company, are close to selling 20 per cent of their holdings for around Rs 1,750 crore.

While a part of the stake is expected to be bought by Narendra Patni, the eldest brother and chairman & chief executive officer of the company, a couple of private equity funds will buy the balance, sources close to the developments said.

The deal values the company at Rs 8,750 crore and is likely to take place at Rs 630 a share, which is an over 12 per cent premium to the stock’s closing price of Rs 561.30 on the Bombay Stock Exchange today. Many private equity funds such as Apax Partners and Blackstone are in the race to buy the stake on offer.

Ashok and Gajendra Patni will each retain a 4.5 per cent stake in the company.

Read more in The Business Standard article.

Apax eyes Patni pie, may pay $800 mn

UK-based private equity major Apax Partners is learnt to be interested in picking a controlling stake in Patni Computers Systems for over $800 million. Sources close to the development say two mid-tier Indian IT companies and some private equity (PE) funds are also in the fray.

These moves come as Gajendra and Ashok Patni, who are co-founders and together own 28% stake in the Mumbai-based company, are looking to exit. PE firm General Atlantic too is looking to sell 16%. When contacted by ET, Apax Partners India head Neeraj Bharadwaj declined to comment on the possible investment.

Patni Computers was founded by three brothers—Ashok, Narendra and Gajendra Patni—who together own 44% in the company. While the two siblings—Ashok and Gajendra—are keen to sell their stake, Narendra Patni will continue to hold a 16% stake in the company.

Patni was once among the leaders in the Indian software market. But over the years, it has slipped. Today, it’s known more as the company where founders of Infosys Technologies used to work. For fiscal 2006, the company had revenues of $579 million and logged a net profit of $59 million. It had around 13,000 employees at the end of March, 2007.

Read more in The Economic Times article.