Satyam nets $62.62 million from Sify stake divestiture

Mumbai: Satyam Computer Services Ltd. (NYSE: SAY) has announced a strategic decision to exit from Sify Ltd completely; it has divested its existing holding of 11,182,600 equity shares (representing its entire stake) of Rs10 each in Sify Ltd., (represented by ADSs), to Infinity Capital Ventures LP, a firm controlled by one of the most successful Silicon Valley entrepreneur, Raju Vegesna.

Satyam had formed Sify in December 1995, as a strategy to enter allied businesses and to create long term business and investment value. As against its original investment of $5 million in Sify in 1995, Satyam has received a total gross consideration of about $117 million till date, making it a highly successful and value creating investment for Satyam's shareholders.

According to a press release from Sify Ltd, Infinity Capital is reported to have bought 31.61 per cent of Sify's stake held by Satyam in two separate transactions, and agreed to purchase directly from Sify about 6.7 million newly-issued shares at a price of Rs256.09 (about $5.60) per share in cash.. "The closing of the direct purchase from Sify, representing an additional investment of Rs 1,721 million (about $37 million at an exchange rate of Rs45.73), is expected to occur in late 2005 upon receipt of stockholder and regulatory approvals," the release stated.

B Ramalinga Raju, chairman, Satyam Computer Services Ltd,. Said, "The move would enable Satyam to further focus on its core business and unlock value of its investment. Leveraging Satyam's brand and committed support, Sify has emerged as a strong player in the data and network space in India. I am sure that Sify's management team will continue to scale up Sify's growth with the active support of the new investor."

A press release from Satyam, also states that the ADSs are priced at a premium by about 7.5 per cent over one month's daily average price as quoted on NASDAQ, where Sify's ADSs are listed and traded. This transaction has enabled Satyam to realised a gross consideration of about $62.62 million subject to transaction expenses and tax on capital gains.

DSP Merrill Lynch was the advisor to Satyam on the sale of ADSs, while ICICI Securities was the arranger to SIFY's sponsored ADS.