Mind On Target

Why Mindtree is an attractive prospect for those in the fray to buy out Café Coffee Day founder VG Siddhartha’s stake in the company

- Harichandan Arakali

In March 2018, VG Siddhartha stepped down from the board of directors of Mindtree, a well-regarded IT services vendor in Bengaluru. In a recent interview, Rostow Ravanan, Mindtree’s CEO, recalled that Siddhartha wanted to focus more on his own business at the time, which was expanding.

The move, however, triggered speculation that Siddhartha, the largest investor in Mindtree, was looking to sell his stake in the IT company. That speculation had gathered momentum more recently, with a flurry of newspaper reports, citing unnamed sources, claiming that Siddhartha’s 20.4 percent stake in Mindtree is on the block.

On February 7, Siddhartha confirmed to the stock exchanges that he indeed wants to sell. “The board, at its meeting held today, has given in-principle approval to sell the equity shares held by the company, its subsidiary and the promoter respectively in Mindtree Limited,” Coffee Day Enterprises Ltd, of which Siddhartha is the founder and chairman, said in a statement to the stock exchanges.

The newspaper reports point to Larsen & Toubro (L&T) as a potential buyer. One might recall that L&T, which has its own IT services company L&T Infotech, lost out to the Mahindra Group in a government-backed auction nearly 10 years ago to acquire the scandal hit Satyam Computer Solutions. Other potential buyers mentioned me in the reports include American private equity (PE) company KKR, Baring Private Equity Asia and Canada’s Fairfax Holdings Ltd.

For the quarter ended December 31, Mindtree’s revenues rose 17.4 percent over the corresponding period in the previous year, to touch $251.5 million. This puts the company on the trajectory to become a billion dollar company by revenues.