Gsic Picks 2% Stake In Sify For $50 M

The Government of Singapore Investment Corporation (GSIC) has picked up a 2 per cent stake in Internet service provider Satyam Infoway (Sify) for a consideration of $50 million (Rs 220 crore) at $36 a share, a 12.5 per cent premium to its Nasdaq price on Tuesday.

The Singapore-based fund has acquired the stake from Satyam Computer, the promoter of Sify. The deal will dilute Satyam Computer's stake in Sify to 54 per cent from 56 per cent at present.

When contacted, a Satyam Computer spokesperson said "Right now we cannot comment on the development."

Satyam Computer had earlier put on hold a plan to divest three per cent stake in Sify to strategic investors "due to unfavourable market conditions", its officials had then said. The share price of Sify then had crashed to around $9 on the Nasdaq from a high of around $43.

 

Apart from Satyam Computer, Commonwealth Development Corporation is the other major shareholder in Sify with a holding of around 17 per cent. Sterling Computers holds another 2 per cent, while the balance equity is with ADR holders.

Industry sources familiar with the deal said the company has applied to the Foreign Investment Promotion Board (FIPB) and that the approval is expected by Friday. The US-based investment bank Salomon Smith Barney was the merchant banker for Satyam Computer. The proceeds from the divestment will be utilised by Satyam Computer to reduce its outstanding debt which is presently pegged at around Rs 330 crore.

Satyam Computer had earlier announced its decision to make the company a debt-free one.

Sources familiar with the deal said that in the earlier round of negotiations, the two front-running institutions were GSIC and the Unit Trust Of India (UTI).