Companies

Mindtree co-founders said to be resisting

stake sale to new suitors
Venkatesh Ganesh Bengaluru | Updated on December 18, 2018 | Published on
December 18, 2018

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Market watchers said that the valuation of Siddhartha’s

stake has increased exponentially
The founders of Mindtree are understood to be resisting giving away
their stakes for possible key investors to acquire majority stake in the
mid-sized IT company.
Reports about VG Siddhartha, a majority stakeholder in the company,
planning to sell his 20.3 per cent claim in Mindtree first emerged
nearly a year ago. There have been several suitors who are learnt to be
keenly interested in picking up a majority stake in Mindtree even
though the IT services company’s journey — which began 19 years ago
towards the $1-billion-mark revenue — has been painfully slow. Its
revenues now stand at $846 million as of FY18.
The Cafe Coffee Day founder, Siddhartha, is understood in talks with
private equity (PE) firms to buy out his total stake in the company. It is
learnt that KKRis already in talks with Siddhartha.
Interestingly, KKR was one of the early investors in Cafe Coffee Day
and has pumped in $80 million through a structured equity solution.
Sources that BusinessLine spoke to, who are aware of the ongoing
talks, said that Siddhartha is seeking a complete exit and is looking to
sell his stake. Another source said that Siddhartha is also talking to
some other investors which include Abu Dhabi Investment Authority
(ADIA), an investment arm of the Government of Abu Dhabi.
Management claim
However, the prospective buyer is seeking management control and
Siddhartha doesn’t have enough to seed control of the company. “It
would need the consent from the founders or support from other
shareholders for the deal to go through,” said the source.
Krishnakumar Natarajan, in an emailed response said: “This is a
speculative report. As a matter of policy, Mindtree does not comment
on speculation.” Email sent to KKR India went unanswered.
Apart from a 3.6 per cent stake in Mindtree, Siddhartha holds 10.64
per cent through Coffee Day Enterprises and 6.45 per cent through
Coffee Day Trading in MindTree.
Other claimants
While Siddhartha is the single largest investor, the mid-sized company
was founded by Subroto Bagchi, NS Parthasarathy, Krishnakumar
Natarajan and Rostow Ravanan, who all put together hold close to 13
per cent. Ravanan, in an earlier interaction with BusinessLine, had
said Siddhartha is only an investor and is not involved in the day-to-
day operations of the company.
“Tomorrow if the Board changes the management team, it is a separate
story. At an operational, strategy side of things our management is
very stable,” he said.
Siddhartha, an early investor in the company, bought stakes from
Walden Capital and co-founder Ashok Soota when he exited Mindtree.
Market watchers said that the valuation of Siddhartha’s stake has
increased exponentially.
“Where is he going to get such a return if he exits,” one of the
founders in the company remarked.
Published on December 18, 2018

Coffee Day Enterprises Ltd

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