Intel Cap gains Rs 150 cr from NIIT stake selloff

IT JUGGERNAUT ROLLS ON

Intel Capital, the venture capital arm of chip maker Intel, is understood to have made a killing of about Rs 150 crore by selling almost its entire stake in IT education firm, NIIT, for nearly five times the acquisition price.

According to market sources, Intel Capital sold its 9.4 per cent stake in NIIT to a Singapore-based investment group Orient Global for $48 million (about Rs 196 crore at an exchange rate of Rs 41 to a dollar).

Intel Capital sold 2.06 million equity shares at Rs 950 a share through open market transactions to Orient Global, founded by Richard Chandler.

An NIIT spokesperson said: "These are secondary market transactions, which we are not concerned with, however it is a positive sign for us as it shows the buoyancy in the share."

Professor James Tooley, President of the Education Fund (through which the shares were bought), said: "Orient Global Education Fund's is investing in a leader in the education industry that is pushing forward the frontiers of innovation in content development and delivery."

NIIT shares ended at Rs 1,003.55, up 1.27 per cent, on the Bombay Stock Exchange in a sluggish stock market where the benchmark index Sensex closed lower by 70 points.

NIIT had in 2005 issued 2.18 million foreign currency convertible bonds worth $10 million to Intel Capital (Cayman). The bonds were recently converted into equal number of shares at Rs 200 a piece or a total of about Rs 43 crore.

Investors holding FCCBs appear to be more inclined to cash in on soaring valuations on the Indian bourses. In case of NIIT, these bonds have been converted into shares at a sharp discount to the company's scrip.

This means the value of Intel Capital's investment in NIIT soared from about Rs 44 crore to roughly Rs 196 crore in about two years.

In another secondary market transaction, Citigroup has purchased 15.87 lakh shares, representing 7.23 per cent stake in NIIT, raising its stake in the company to 8.55 per cent. Market sources said Merrill Lynch also bought 56.84 lakh shares at Rs 951 a share.

Orient Global established The Education Fund in February 2007. It is focused on developing and strengthening entrepreneurial solutions which improve the availability and quality of education in developing countries.

NIIT offers learning and knowledge solutions across 32 countries. It had acquired learning solutions company last year, Element K, which helped NIIT to record a consolidated profit after tax (PAT) of Rs 17.1 crore in the fourth quarter ending March 2007 "" an increase of 107 per cent from Rs 8.26 crore recorded in the corresponding quarter last year.

The company's revenues for the quarter grew by 123 per cent year on year to Rs 256.6 crore compared with Rs 115.06 crore reported in the same period last year.