Currently the Patni family controls a 44% stake of the company, while the total stake owned by foreign institutional investors, including private equity group General Atlantic Partners and banks such as UBS and HSBC, is capped at 22%.
But the company has decided to increase the maximum foreign stake to 74%, according to an article in the Press Trust of India. A separate article in the Economic Times says General Atlantic may be making a move to acquire some of the family stake in Patni. And private equity firm Apax Partners is also said to be looking for a large ownership position.
Our View
So far, however, none of the big global services firms have been mentioned as potential suitors for Patni. Patni, with some $579m in revenue for its fiscal 2006, is India’s sixth-largest services vendor, behind TCS, Infosys, Wipro, Satyam, and HCL. It would add an immediate huge presence to any buyer’s offshore presence; the company had more than 13,000 employees at the end of the last quarter, more than 10,000 of whom are based offshore.
Those big services vendors that trail IBM and Accenture in terms of Indian headcounts have shown a willingness to take on large offshore acquisitions. EDS bought Mphasis last year, and the transaction appears to be integrating smoothly with EDS’ global delivery systems and its intention to get more involved in the applications space. Capgemini paid $1.3bn for the 6,500-employee Kanbay, also last year. And recently CSC made up for its previously low Indian headcount with the acquisition of Covansys, which has 9,000 employees, 70% of whom are in India.
That doesn’t leave too many players left who could swallow such a big companies. So it appears likely that the near future of Patni may belong to the private equity firms and investment banks, which have shown a keen interest in the IT services market lately, including the fast-growing Indian market.
