Ramalinga Raju: Focussed

Hyderabad, Nov. 10: Satyam Computer Services today sold its entire 31.61 per cent stake in Sify Ltd to Infinity Capital Ventures LP, a company owned by Silicon Valley entrepreneur Raju Vegesna. Over the last five years, Satyam had been gradually pulling out of Internet services business.

In two separate transactions, Infinity Capital bought Satyam’s stake in Sify for $62.6 million and agreed to purchase directly from Sify about 6.7 million newly-issued shares at a price of Rs 256.09 (about $5.60) per share in cash, said a release from Sify.

In total, Infinity has acquired a 40 per cent stake in Sify. The sale price of $5.60 per share is slightly higher than the last traded price of $5.38 per share for Sify on the Nasdaq.

The closing of the direct purchase from Sify, representing an additional investment of Rs 172.1 crore (about $37 million at an exchange rate of Rs 45.73), is expected to happen later this year upon receipt of approvals from stockholders and regulators, Sify said.

Under the deal, Sify has agreed to appoint Vegesna as chairman and an additional person to be designated by him to its board of directors.

DSP Merrill Lynch was adviser to Satyam on the sale of the ADS, while ICICI Securities was arranger to Sify’s sponsored ADS programme.

Satyam chairman B. Ramalinga Raju said, “The move would enable Satyam to focus on its core business and unlock the value of investment.”

Sify has zero debt and will have cash on hand of about Rs 286.3 crore (about $62 million at an exchange rate of Rs 45.73) post infusion.

With the additional investment of Rs 172.1 crore, Sify’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, it said.

Till date, Satyam had received $117 million by selling its stake in Sify, the release said. Satyam had made an initial investment of $5.9 million in Sify in 1995.