ICICI proposal to invest Rs 270cr in Scandent falls through

Merrill Lynch to step in with Rs 135 crore

Scandent Solutions has decided not to go ahead with ICICI Ventures' proposed investment of Rs 270 crore in the company for a 10 per cent stake.

However, Scandent has decided to go ahead with Indopark Holding Limited, a wholly owned subsidiary of Merrill Lynch, to raise close to Rs 135 crore by divesting 5.6 per cent.

Scandent will be issuing convertible bonds aggregating up to Rs 135 crore to Indopark Holdings Limited. The issue of securities is being made on a preferential basis at a price of Rs.217.00 which is in accordance with the SEBI guidelines.

Scandent while announcing this deal said that this investment was in lieu of the ICICI Ventures investment approved earlier and they would not be proceeding with the ICICI Ventures investment proposal.

Pradeep Choudhry, CFO, Scandent, explaining this step said that they felt that Merrill Lynch was more of a strategic partner.

"One more reason for opting for this smaller sum was that we felt we did not require the Rs 270 crore as earlier planned. The Rs 135 crore investment we are getting now will be just apt for us and if needed at a later stage, we can go in for another round of funding," he said.

Scandent is in the process of merging with Cambridge Solutions to create a Rs 1,200-crore software and BPO services entity and this infusion of funds will primarily be used to wipe out the $19-million debt in Scandent Solutions and then to cater to expansion.

The company is putting up a new facility in Bangalore to house 3,000 developers which will be ready by April 2006.

Scandent during October last had decided to issue convertible debentures and warrants aggregating up to Rs 270 crore being issued to Funds Managed / advised by ICICI Venture Funds Management Company. The issue of securities is being made on a preferential basis at a price of Rs 220.

Currently, Scandent Solutions has 1,200 personnel focusing on software development services for BFSI (banking, financial services and insurance), government and manufacturing verticals, while Cambridge Solutions, with 2,200 employees, focuses on claims processing business process outsourcing work.