Aig May Pick Up Mindware Stake
The $1.35 billion American International Group (AIG) may pick up a stake in PCL Mindware, the software exports division of the PCL Group.
"The talks with AIG are at an advanced stage and we hope to finalise the deal soon," a senior official of PCL Mindware told Business Standard.
The insurance major AIG is likely to pick up a 15 per cent holding in the software firm.
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Arthur Andersen, it may be recalled, had valued PCL Mindware in the range of $46-71 million. Mindware's local operations have been valued between $46-55 million, while the outer value of the division, including overseas arms and operations have been put at $71 million. According to software analysts, the decision to spin off Mindware will further fuel the growth of the company's export operations. "The spin off will offer us an opportunity to effectively and gainfully use our revenues," the official reasoned.
Although, Mindware achieved a good growth rate in software exports, PCL's debt burden had virtually cut it off from receiving any funds from financial institutions. It was unable to secure any loans by itself owing to the fact that it was only a division of PCL.
PCL has slid into bad times following its failure to clear a huge backlog of PCs booked by customers as early as September 1996. It may be recalled that the PCL Group had earlier decided to spin off this software division into a separate company as a joint venture by divesting 50 per cent equity to either an investment company or a technology major.
"We were in talks with a couple of other companies including an Indian company to pick up stake, but it is highly likely that AIG will be the one to do it," the official added. The company has rejected two offers for a buy out and other offers by firms angling for a majority share. The decision to spin off Mindware had been recently delayed due to the resignation of a group of senior executives.
So far, investments of Rs 70 crore have been made in Mindware, of which Rs 20 crore has been in its international offices.
It had posted a turnover of Rs 35 crore during the fiscal 1996-97.
The company has drawn out plans to invest a total of $8 million during the current fiscal. It also proposes to start development operations in Japan and the UK by end 1998. Mindware currently has six wholly-owned subsidiaries in Germany, Japan, Singapore, South Africa, US and the UK.