GTV's Siddhartha may buy Soota's stake in MindTree

In a move to back the company he seed-funded more than a decade ago, Cafe Coffee Day Group owner V G Siddhartha, is expected to buy the 11.1 per cent stake in MindTree held by Ashok Soota for Rs 270 crore. The move will enable Siddhartha to become the single largest shareholder in MindTree.

Soota, the co-founder of Mindtree, had recently quit to start a new venture Happiest Minds Technologies. According to industry insiders, Siddhartha may be paying a premium of nearly a Rs 100 crore for Soota's stake based on the current market capitalisation of MindTree, which is a little over Rs 1,400 crore.

MindTree had been facing a tough time during the past two years and its fourth-quarter FY11 net profit fell 41 per cent from the year-ago period to Rs 32 crore on lower forex gains, withdrawal from the wireless product business and drop in revenues from a major client. Total revenues during the January-March period rose 13.6 per cent to Rs 391.2 crore. For the year ended March 31, net profit declined 52.7 per cent to Rs 101 crore.

Siddhartha is expected to buy Soota’s stake through his venture capital arm Global Technology Ventures — the same subsidiary through which he along with other venture capital funds helped form MindTree during 1999.

Global Technology Ventures holds 6.12 per cent stake in MindTree, while Nalanda India Fund is the single largest shareholder with 9.86 per cent. Walden Software Investment holds eight per cent. Walden is also among the first funds along with GTV which seed-funded MindTree. 

If Siddhartha manages to effect this deal, GTV will be holding around 17.2 per cent stake. While Siddhartha did not respond to text messages, Soota denied any such move. However, two independed people in the know, who are close to Siddhartha and Soota, did indicate the deal is in the works.

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.

Siddhartha, a seasoned entrepreneur who started his career at J M Morgan Stanley, has hundreds of acres of coffee estates in Chikmagalur and has expanded his businesses rapidly. His business is valued at $1 billion and ranges from coffee retailing & exports, wealth management, waste management, logistics, furniture, hospitality, granites to SEZ development and food processing. Last year, 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.