Mindtree acquisition saga: Nalanda Capital sells entire 10.6% stake to L&T

Current holding of L&T in Mindtree exceeds 45%

The founders of Mindtree on Monday lost their last line of defence against L&T’s takeover bid as Nalanda Capital sold its entire 10.6 per cent stake in the Bengaluru-based firm to the engineering major. Sources said after putting up a stiff resistance, Nalanda Capital, which was so far seen as a supporter of founder’s stance, tendered its shares in the open offer on Monday.

Apart from Nalanda Capital, multiple sources also said Singapore-based Arohi Asset Management, which manages Ontario Teachers’ Pension Plan Board’s stake of 1.22 per cent, has also offloaded its stake.
 

According to data available on exchanges, L&T’s holding in Mindtree has crossed 45 per cent mark by Monday. At the end of trading hour on June 24, the engineering major has received 17.5 per cent stake in Mindtree through the open offer. “With Nalanda Capital selling its entire holding, Mindtree founders’ have lost the plot now. Now, L&T will be able to comfortably end up with a controlling stake in the IT firm by the end of the open offer,” said a source, familiar with the development.

Apart from Pulak Prasad-led Nalanda Capital, even Amansa Capital sold its 2.6 per cent stake in Mindtree last week. “With most foreign portfolio investors (FPIs) exiting their positions, founders of Mindtree will have very minimal option to get a good bargain from L&T. So, eventually, some of them may exit,” said another person tracking the development.

With an average acquisition cost of Rs 260 per share, Nalanda Capital would make a handsome profit on its investment at L&T’s open offer price of Rs 980 per share. Sources said Nalanda’s exit from Mindtree could be linked to the fact that some investors had complained against the fund house to be acting in concert without Sebi approval, along with alleged attempt to influence other investors for not tendering their shares.  

Currently, the process of open offer for acquiring 31 per cent stake in the Bengaluru-headquartered IT services firm is going on, which will be completed on June 28. While the Committee of Independent Directors of Mindtree has earlier termed the offer price of Rs 980 per share as ‘fair and reasonable’, proxy advisory firm InGovern has advised shareholders to tender their shares given the attractive pricing as compared to peers.  

Last week, Mindtree board has approved appointment of three L&T’s nominees — Chief Executive Officer (CEO) and Managing Director (MD), S N Subrahmanyan, Chief Financial Officer (CFO) Ramamurthi Shankar Raman and whole-time Director and Senior Executive Vice-president for L&T’s defence business Jayant Damodar Patil. All of them will come as non-executive directors.

The board has also approved appointment of two independent directors Prasanna Rangacharya and Deepa Gopalan Wadhwa. Mindtree’s Co-founder and Non-executive Director Subroto Bagchi has opted out of reappointment. L&T is pursuing a controlling stake of 66 per cent in the mid-tier IT firm for Rs 10,700 crore. However, the unsolicited takeover attempt is being opposed by Mindtree’s founders, who seek more clarity on L&T’s plan.