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| Coffee Day chairman buys out Soota's stake in MindTree |
| Raghuvir Badrinath / Bangalore Jan 24, 2012, 00:06 IST |
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Coffee Day Group Chairman V G Siddhartha has bought out the residual 3.5 per cent stake held by Ashok Soota in mid-tier software exports company MindTree Limited, Coffee Day said in a statement to the Bombay Stock Exchange on Monday. With this, Siddhartha has become the single-largest shareholder in the publicly-held Mindtree, a company started by a group of technology entrepreneurs led by Ashok Soota during the late 1990s.
Siddhartha effected the third and last step to buy out Soota’s stake in MindTree nearly nine months after he started buying out his stake step by step. While he held 6.54 per cent through Global Technology Ventures (GTV), he has used another vehicle, Coffee Day Resorts, to claw up his stake by 11.8 per cent. As a result, he has 17.8 per cent control in this company, which was valued at close to Rs 1,800 crore on Monday’s stock price of Rs 441.
Siddhartha’s step to buy out Soota’s stake was precipitated after the latter’s sudden exit from MindTree during early 2011, due to various differences among the promoter group. Soota has since started a new software exports firm, Happiest Minds Technologies, for which he has in addition to his funding raised private equity from Intel Capital.
It is understood that Siddhartha has paid out close to Rs 200 crore to effect this transaction, for which he has raised debt through a non-banking financial company, besides internal resources. However, he did not reply on this aspect.
A seasoned entrepreneur who started his career at J M Financial, Siddhartha has hundreds of acres of coffee estates in Chikmagalur and has expanded his businesses rapidly. His business is valued upwards of $1 billion and ranges from coffee retailing and exports, wealth management, waste management, logistics, furniture, hospitality, granites to SEZ development and food processing.
During 2010, Siddhartha had raised a record $200 million from blue-chip private equity funds KKR, Standard Chartered and New Silk Route in a move to fast expand his bouquet of businesses. Global Technology Ventures has also invested in marquee technology companies, including a chip-design firm Ittiam Software, GlobalEdge Technologies, besides a few others. GTV had a blockbuster exit from its investment in Kshema Technologies when it was sold to MphasiS Software. Bank of America was one of the limited partners in GTV, before being bought out by GTV.
MindTree, during the past few quarters, has been facing intense pressure on its margins due to a restructuring process. However, during the third quarter of financial year 2011-12, its net profit doubled to Rs 60.6 crore against the same quarter last year. Revenue grew 35.1 per cent to Rs 519.7 crore as compared to same quarter last year, as a depreciating rupee helped the cause to an extent. For the year ended March 31, 2011, net profit declined 52.7 per cent to Rs 101 crore.
After Siddhartha’s holding of 17.8 per cent stake, Walden Software Investment and Nalanda Capital are the two other major shareholders in MindTree, besides the promoter group which holds 21 per cent.
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