British Telecom renews Tech Mahindra exit plan

UK-based British Telecom (BT) has once again started exploratory talks to sell its stake in one of India's 6th largest software service company Tech Mahindra, that is currently valued at around Rs3,690 crore ($830 million).

The Economic Times today reported citing people with knowledge of the discussions that BT has re-initiated talks to sell its stake in Tech Mahindra and private equity firms including Apax Partners and Providence Equity have shown interest in buying the stake.

The London-based £21.39-billion telecom giant, which holds 30.83 per cent in Tech Mahindra is expecting a premium of 30 per cent over the current market price of Rs765, valuing its stake at around Rs3,690 crore.

BT has been looking to divest its stake in Tech Mahindra since 2008, but had to put its plans on hold following the stock market collapse due to the global recession.

In May 2010, it once again held exploratory talks to dilute 7 per cent in Tech Mahindra, (See: British Telecom may sell 7 per cent stake in Tech Mahindra: Sources) but with the Indian stock market reaching dizzy heights since last month, it may have thought it the right time to exit for a good value for its stake.

Goldman Sachs Private Equity is also learnt to have held discussions with BT, although it has not yet approached the Mahindras, said the paper.

Although the Mahindra Group, which is the largest shareholder in Tech Mahindra holding over 43 per cent has the right of first refusal for BT's stake, the Mumbai-based company is unlikely to invest now, after its acquisition of scam-hit Satyam Computers after pipping rival L&T infotech in April 2009 (See: Tech Mahindra edges out L&T to acquire Satyam).

But any stake sale in Tech Mahindra would also involve Mahindra Satyam, i8n which Tech Mahindra holds a little over 42 per cent stake.