iGate deal to end period of uncertainty for Patni shareholders

Industry analysts today said conclusion of an estimated $1 billion deal for acquisition of a majority stake in Indian IT services firm Patni Computer Systems by a consortium of US-based iGate and Apax Partners will be good for the entire industry.

"It will be good for the industry and Patni specifically, which has seen such efforts (for a stake sale) in the past. With the closure of the deal, Patni will have a clear roadmap for the future," PriceWaterhouseCoopers Associate Director Abhijeet Ranade told PTI.

The deal will help both companies optimise cost and efficiency, as well as explore new verticals, another analyst said.

The Patni brothers -- Narendra, Ashok and Gajendra Patni -- were in talks to sell their 46 per cent stake in Patni to a consortium of iGate and Apax Partners. In addition, private equity firm General Atlantic was also looking to sell its 17 per cent stake.

The Patni promoters are likely to sign a deal with iGate next week. Both Patni and iGate officials declined to comment.

Shares of Patni closed at Rs 460.10 apiece on the Bombay Stock Exchange today, down 0.69 per cent.

Closure of the deal would mark the culmination of several efforts by Patni's promoters and General Atlantic to sell their stake since 2007. Earlier attempts to sell a stake failed because of disagreements between the brothers and the high valuation expectations of the sellers.

"Irrespective of who is the new owner, it will be a new start for Patni. There will be a clear roadmap and the company will compete not just with the tier-II players, but major league players as well," research firm Gartner's Senior Analyst, Arup Roy, said.

Patni, a mid-sized IT services firm, provides software solutions in verticals such as insurance, telecom, utilities and retail. Patni's revenues for the year ended December, 2009, stood at Rs 1,751.33 crore ($391.79 million, at an exchange rate of Rs 44.70 per US dollar).

IGate's revenues, on the other hand stood at $74.8 million for the quarter ended September, 2010, and $193.09 million for the whole of 2009.

"Though there will be initial hiccups like people leaving the firm or clients walking out, it will settle down and the company would have a more clear roadmap of growth," Roy said.