Venture Tech, an existing investor in Chennai-based Nasdaq-listed connectivity provider Sify, is understood to have mopped up the entire one million equity shares that Satyam Computer Services has offloaded through a sponsored ADS programme.
Satyam made the sale at a price of Rs 198.90 ($ 4.35) per share, netting Rs 19.72 crore (Rs 197.2 million). However, the income will not be reflected in the company's second-quarter results since sale took place on October 1.
Another early investor in Sify, SARF (South Asia Regional Fund, an affliate of Commonwealth Development Corporation), which holds a 10.3 per cent stake in the company, is also understood to have offloaded its entire stake through the sponsored ADS programme.
Interestingly, sources point out that SARF's 10.3 per cent stake has been picked up by another worldwide affiliate of CDC, though no names are yet known. A total of 4.6 million shares are being offered under the sponsored ADS programme.
The two major shareholders who have opted to participate in the programme are Satyam Computers and SARF.
Some minority Indian shareholders with minuscule holdings also are understood to be participating in the sponsored ADS programme.
With this Venture Tech's stake in Sify has increased from 13.8 per cent to 16.8 per cent. Venture Tech along with SoftBank Asia Infrastructure Fund (SAIF) had invested close to $20 million in October 2002 for a combined 26.2 per cent stake in the company. At that point of time, Venture Tech held 13.8 per cent in Sify while SAIF had a stake of 12.4 per cent.
In June this year R Ramraj, CEO, Sify Ltd had told Business Standard that the company was seeking shareholder approval for a sponsored ADS programme to ensure some amount of liquidity to its Indian shareholders.
"The sponsored ADS is for the benefit of the Indian shareholders and will be restricted to only a portion of the Indian holding in the company," Ramraj had said.
"We have about 20 million shares in the hands of Indian shareholders and this will improve the liquidity of their holdings," Ramraj said.
This would also mean that Indian shareholders like Satyam Computers, the promoters of Sify, who have a 35 per cent stake in the company cannot exit the internet company totally through the ADS route.
Satyam Computers has also indicated in the recent past that it is not averse to downsizing its holding in the internet company which has in the most recent quarter turned in a cash profit.
The company had announced the profit for the fourth quarter ending March 31, 2003, for the first time in over twelve quarters.
Sify also reported a positive cash generation from operations for the first time since inception.
Satyam has been trying at least for the last two years to offload its stake in Sify in the belief that both the companies would gain by becoming "pure play" entities in their respective spaces: Satyam in IT services and Sify in Internet.
Satyam has always been lucky while dealing with its erstwhile subsidiary's equity. The company in May 2000 sold 3,47,200 equity shares Sify at $144 per share to the Government of Singapore Investment Corporation for an aggregate amount of $50 million.
GSIC had a put option to sell the shares back to Satyam if Sify did not complete an IPO by September 2001.
