Aberdeen, Swiss Finance exit Satyam

Two major institutional shareholders of Satyam Computer Services today exited the company following its founder-chairman Ramalinga Raju’s revelation of fraud in the IT firm’s balance sheet.

Besides Aberdeen International, Satyam’s largest institutional investor, and Swiss Finance Corporation’s exit, Fidelity and Morgan Stanley too offloaded a substantial portion of their holdings in the IT firm through bulk deals on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Aberdeen International, which had about 5.3 per cent stake in Satyam through its two India-centric international funds, sold its entire holdings of about 3,60,00,000 shares at Rs 42.60 each.

Similarly, Swiss Finance Corporation sold its entire 1.12 per cent equity holdings in the company at Rs 74.61 a share.

 

At the end of September 2008, Satyam recorded its total institutional equity holding at 61.57 per cent. Today, about 30 per cent of Satyam shares were marked for delivery on both the exchanges. Through bulk deals, the institutional investors sold about 8.62 per cent in Satyam today.

Fidelity, which held about 3.42 per cent in Satyam at the end of September 2008 through one of its international funds, sold 40,00,000 shares at Rs 108.96 each, thereby trimming its exposure to Satyam. Following the trend, the US-based Morgan Stanley also offloaded about 47,70,000 shares of Satyam at Rs 68.68 a share.

Raising concerns over the financial frauds in the balance sheet of Satyam, Life Insurance Corporation of India (LIC) and ICICI Prudential Life Insurance — the two major domestic investors in the IT firm –termed the developments as unfortunate and unprecedented.

LIC, which holds about 4.34 per cent in Satyam, said it would refrain from taking any impulsive step, hinting that the insurer would not sell off its stake immediately.

“We are a long term investor and our policies are not governed by any temporary trigger in the market. It is quite unfortunate in part of Satyam to deal with such difficult situations. We are concerned about the company and hope that conditions will improve soon. We also expect the shares of the company to bounce back on the secondary market once the situation eases,” said LIC Managing Director Thomas Mathew T.

“We will hold a discussion with our investment team to take a call on our holdings in Satyam, if required,” he added.

ICICI Prudential, which holds about 3 per cent in Satyam, said its investment as a percentage of its total assets was insignificant.

“This certainly is an unprecedented event. As a long-term fund manager, we have strong risk management controls that ensure that there is adequate diversification in the portfolio with negligible concentration risk at any point of time,” said an executive of ICICI Prudential.

“Our exposure to Satyam as a percentage of our portfolio is insignificant as of now. It is of paramount importance for us to protect the interests of our investors, and we are evaluating all possible options along with other institutional shareholders to maximise the value for our stakeholders,” added the executive.

The total institutional holding in Satyam stood at 21.47 per cent at the end of September 2008. Among the institutional stakeholders, Aberdeen Asset Management Company (AMC) held about 5 per cent, Fidelity about 3.42 per cent and Lazard AMC about 2.15 per cent in Satyam.