Mumbai: Mindtree Ltd’s largest investor and Café Coffee Day’s (CCD) founder V.G. Siddhartha, two firms controlled by him and a few other large shareholders are looking to sell their stakes in the Bengaluru-based software services company, three people directly aware of the development said. Private equity firm KKR and Co. has evinced interest in buying a large stake in Mindtree, said one of the three people cited above, requesting anonymity.
CCD’s V.G. Siddhartha to exit Mindtree, KKR may step in
Siddhartha, who joined the board when he first invested in Mindtree in 1999, stepped down as an independent director in March, a development which triggered speculation that he may cash out on his investments and re-deploy the cash to scale up CCD’s operations.
Siddhartha and Coffee Day Enterprises Ltd and Coffee Day Trading Ltd hold around 21% stake in Mindtree, while, through a number of other entities, Siddhartha and his coffee ventures hold a total of around 26% in Mindtree, which commands a six-month average market cap of ₹16,000 crore currently on BSE.
An email sent to Siddhartha remained unanswered as of publishing this story, while repeated phone calls made to him were not answered.
“Mindtree is in talks with several large potential investment firms, including KKR,” said the second person, also requesting anonymity.
Emails sent to KKR remained unanswered.
To be sure, Mindtree’s stake sale discussions have been on for at least five months now.
In June, Mint reported that Japan’s NEC Corp. and a large global private equity fund were in initial talks to acquire a controlling stake in Mindtree.
However, the promoter group of the company, including its co-founders such as Krishnakumar N. who holds a 3.72% stake, Subroto Bagchi who has 3.11%, N.S. Parthasarathy who has 1.43% and Rostow Ravanan who holds a 0.71% stake are not looking to sell their stakes.
Responding to an emailed query, Mindtree chairman Krishnakumar said: “We have several marquee financial investors who, over a long period of time, have helped build Mindtree into a highly valued institution. As with all financial investors, they have the prerogative to monetize their stake based on their individual priorities. As Mindtree, we are not privy to the plans of these investors and hence cannot offer any comments on it.”
Krishnakumar also said the company is currently not in the process of appointing a banker.
Mindtree, which was set up in 1999, saw a 4.3% increase in revenue to ₹5,463 crore in the year ended 31 March 2018. Net profit rose 36% to ₹570 crore.
On Wednesday, Mindtree shares fell 1.57% to ₹871.00 apiece on the BSE while CCD parent Coffee Day Enterprises’s lost 0.30% to ₹263.20. The benchmark Sensex closed 0.69% weaker at 35,884.41 points.