The Telegraph
Since 1st March, 1999
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Foreign funds hike stake in Digital GlobalSoft

Calcutta, Oct. 14: Foreign institutions have raised their holding in Digital GlobalSoft ó Hewlett Packardís subsidiary in India ó by a little over 2 per cent over the last three months despite the allegation of insider trading made by the Securities and Exchange Board of India (Sebi) against the companyís management.

FIIs also appear to have ignored the proposed merger of Hewlett Packardís Indian unit with Digital GlobalSoft, the swap ratio for which was widely perceived as skewed against the latter.

The likes of Merrill Lynch, Goldman Sachs and Citigroup now hold 20.50 per cent in the company compared with 18.23 per cent three months ago.

Among those that increased their holdings substantially during the last quarter are Merrill Lynch Capital Markets Espana, Citigroup Global Markets (Mauritius) and JP Morgan Fleming Asset Management.

Sebi had in August alleged that the erstwhile chief investment officer of Alliance Capital Mutual Fund, Samir Arora, was privy to price-sensitive news on Digital GlobalSoft.

The securities market regulator had also indicated in its order banning Arora from operating in the market that Alliance Capital Mutual Fund, which was previously bullish on Digital GlobalSoft, had sold its entire holding in the company prior to the announcement of the merger with HP Servicesí India Software Organisation.

Most analysts felt that the swap ratio for the merger was unfavourable for Digital GlobalSoft, and would affect the companyís earnings.

Sebi said Arora managed to avert a loss of Rs 24 crore by selling his fundís holding in the company ahead of the announcement.

Digital GlobalSoft refuted the charges levelled against it by Sebi. It said price-sensitive news on the merger had not emanated from its officials before the formal announcement.

The management of the company had previously defended the swap ratio for the merger. It said joining forces with HP Servicesí India Software Organisation would help Digital GlobalSoft grow, and the swap ratio would not affect the companyís earnings.

Besides Alliance Capital, Unit Trust of India, too, has pared its stake in the company. Unit Trust now holds 2.79 per cent in Digital GlobalSoft, nearly 2 per cent lower than three months ago.

Templeton Mutual Fund, however, appears to have developed a strong appetite for the stock ó it has scaled up its holding from 1.95 per cent to 4.18 per cent during the last quarter.

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