Nasdaq-listed Sify Ltd said on Thursday that Infinity Capital, a company controlled by Silicon Valley entrepreneur Raju Vegesna, has acquired 40 per cent stake in the company, including the entire 31.61 per cent stake of Satyam Computer Services.
In two separate transactions, Infinity Capital bought 31.61 per cent of Sify's stake held by Satyam for $62.6 million and agreed to purchase directly from Sify about 6.7 million newly-issued shares at a price of Rs 256.09 (about $5.60) per share in cash, said a release from Sify, which is based in Chennai.
"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 Rs 45.73), is expected to occur in late 2005 upon receipt of stockholder and regulatory approvals," it said.
The sale of the Satyam shares has been completed and is not contingent on the Sify issuance. The total position will represent approximately a 40 per cent interest in Sify, it added.
"Sify has done very well to innovate and grow its businesses in Internet and net services in India. The company represents the right fit in terms of market opportunity, innovation and leadership in this fast growing market," said Raju Vegesna.
As per the deal, Sify has agreed to appoint Vegesna as its chairman and an additional person to be designated by him to its board of directors.
The sale price of $5.60 per share is a slight premium compared to the last traded price of $5.38 per share for Sify on the Nasdaq.
DSP Merrill Lynch was the advisor to Satyam on the sale of the ADSs and ICICI Securities was the arranger to Sify's sponsored ADS programme.
Sify has zero debt and will have cash on hand of about Rs 2,863 million (about $62 million at an exchange rate of Rs 45.73) post infusion. With this additional investment of Rs 1,721 million, Sify's equity base will expand by 6.7 million shares for a total of 44.8 million shares on a fully diluted basis including stock options outstanding, it said.
Sify had recently received FIPB approval for further infusion of funds into the company.
"Sify's existing core businesses provide a strong platform for future growth both organically and through possible acquisitions - growth that I hope to help enable with, among other things, the infusion of Rs 1.72 billion (Rs 172 crore) in new capital, strategic inputs and assistance in developing alliances with other innovators in this space," Vagesna said.
Commenting on the transaction, R Ramaraj, MD & CEO of Sify Ltd said: "We have always enjoyed a strong supportive relationship with Satyam. We are particularly happy that Satyam is divesting to a strategic investor with a long-term interest in Sify's growth and future."
B Ramalinga Raju, chairman of Satyam Computer Services Ltd, said: "The move would enable Satyam to further focus on its core business and unlock the value of investment."