Intel To Pick 10% Stake In Rediff Comm

Intel Corporation is picking up a 10 per cent stake in domestic internet agency, Rediff Communication. This is the first such equity buyout deal being entered into by the IT multinational in India, outside its subsidairy venture.

The deal will be inked later this week in Mumbai by the visiting chief executive officer of Intel, Craig Barret, and the Rediff top brass. Barret, who arrived here on Monday, is flying to Mumbai today.

According to sources, Rediff will be offloading 10 per cent equity in favour of Intel through the private placement route. Though the exact financial details of the deal could not be ascertained immediately, it is believed to be in the range of Rs 8-10 crore. When contacted, Intel Corporation's country head and director South Asia said: "I am not in a position to officially confirm it." Despite repeated attempts, Rediff Communication chairman, Ajit Balakrishnan, could not be reached for comments.

 

Intel's entry into Rediff is significant as the domestic Internet agency recently launched several net-based services including e-commerce, which will have huge business potential for the MNC.

Rediff, being one of the poineers in India in the e-commerce business, is poised to become a leading player in this sector. It also has a net-based news service, Rediff-on-the-Net.

Intel, along with IBM, is supplying the software and hardware packages for Rediff's e-commerce business. In fact, Intel is being termed the `enabling' partner for Rediff's e-commerce business.

Sources said once the private placement of equity is finalised, Intel will be offered a berth on Rediff's board of directors.

The Mumbai-based Rediff, co-promoted by Ajit Balakrishnan and Arun Nanda, has already offloaded 10 per cent of their equity in favour of Draper Fischer, a venture capital fund.

After this private placement, the company changed its name from Rediff Communication Pvt Ltd to Rediff Communication Ltd. The board was also expanded to accommodate the nominee of Draper Fischer.

The Balakrishnan-Nanda duo currently hold 90 per stake in Rediff Communication, with both the promotes having equal holdings.

Once the private placement with Intel is complete, the promoter's stake in Rediff will come down by that much percentage.

They have already brought down their equity in their advertising venture, Rediffusion, to 60 per cent by selling off their 40 per cent stake to Japanese-US advertising major Dentsu, Young & Rubicam (D&YR). The company has since been rechristened Rediffusion D&YR.