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Inking Satyam’s sale was a daunting task

Inking Satyam’s sale was a daunting task
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First Published: Tue, Jan 05 2010. 09 11 PM IST

Rescue act: Satyam Computer Services’ head office in Hyderabad’s Hitec City.Bharath Sai/Mint
Rescue act: Satyam Computer Services’ head office in Hyderabad’s Hitec City.Bharath Sai/Mint
Updated: Tue, Jan 05 2010. 09 11 PM IST
There was something serene about the place, even in the presence of a posse of policemen—some of them armed—at the gates. The serenity belied the reasons for which we were at the gates of Satyam Computer Services Ltd’s head office in Hyderabad’s Hitec City.
We were answering a summons to facilitate the sale of the reeling, beleaguered and tainted corporate giant.
B. Ramalinga Raju, founder and former chairman of Satyam, had on 7 January 2009 admitted to years of financial lies and fabrications in India’s then fourth largest information technology (IT) organization, plunging the country’s corporate reputation into a sea of risks.
Rescue act: Satyam Computer Services’ head office in Hyderabad’s Hitec City.Bharath Sai/Mint
The timing could not have been worse. Several companies, banks and businesses globally were being flattened by the storm of a financial crisis and Raju’s revelations raised a scare of a similar crisis at home.
I looked at Amit (Amit Singh, executive director, Avendus Capital) as we walked, caught his eye and saw him firm his jaws in determination. I drew a breath and continued the brisk pace to the general security scrutiny before being let in.
Sometimes, fate and wishes go hand in hand.
The day Raju sent his letter to the stock exchanges, admitting to financial irregularities of around Rs7,000 crore, we were in a meeting with a private equity firm looking for acquisitions. I suggested Satyam, my instincts guided by the IT firm’s announcement to acquire Maytas Infra Ltd and Maytas Properties Ltd—non-related group businesses. What none of the us in the room knew at that moment was that we’d be delving into Satyam pretty soon.
Untested waters
How do you chart a route that has had no precedence, no inspiration to draw lessons from? Ask us at Avendus and we’d say that now that Satyam has found a suitor, we know there’s always a first time. I’d like to believe that the Satyam story for Avendus is a milestone, the wrap of the first decade of our existence as an investment banking firm. Today, we have added a new pitch to our formidable tune, thanks to the Satyam lessons.
Inking Satyam’s sale was not only a difficult and daunting task, but was formidable in the national importance attached to it. The ramifications were too significant and far-reaching, considering the novelty of the scandal and the situation thereafter. Buyers were required to submit financial and non-financial bids and we had to figure their intent and whether they fit into the scheme of things.
There was also the challenge of time. A buyer had to be found in less than three months—someone who would complement Satyam’s large client base, had the security, expertise and focus to rejuvenate a company that had lost its reputation, and could go along with our purpose to protect the interests of the investors.
The one-of-a-kind concerted effort on the part of all involved in Satyam’s rescue epitomises the solidarity and huddling up the Indian business environment is capable of. Whether it is the government of India (in the avatar of the ministry of corporate affairs), or the government-mandated Satyam board with mandarins such as Kiran Karnik, Deepak Parekh and C. Achuthan on board, or former chief justice of India S.P. Bharucha, the merchant bankers and legal advisers—all played their individual roles well to put Satyam on the turn-around road.
Fear to relief
The D-Day: 14 April 2009. Of course, there were apprehensions of the day turning out to be the Ides of April for Satyam. It was a dramatic scene at Taj President Hotel in Mumbai as we huddled up in a room. Tension was in the air as everyone felt but did not talk much about the media in strength outside the room. In fact, the media had been on top of everything and anything to do with Satyam for the past 70-75 days, camping outside the firm’s office in Hyderabad, reporting every development and tracking the movements of anyone remotely associated with the bid.
The probing eyes and moral heaviness within each of us made the scenario sombre still. What if no one turned up for the bid? What if there was no winning bid? These questions ran in our minds even as the first bid was opened.
Finally, the winning bid was at a 50% premium to the then market price of Satyam. Tech Mahindra Ltd won the bid at Rs58 per share and secured complete funding to acquire a 51% stake in Satyam.
I have never before seen the elation unleashed within a matter of minutes. Once the bid was done, the media flashed the news. Fear and apprehensions gave way to relief on all the faces in the room as it dawned upon us that we had finally managed to find a buyer for Satyam.
Sometimes, April showers do bring May flowers.
The author is managing director and chief executive, Avendus Capital Pvt. Ltd, an investment bank that advised Satyam on its sale. Respond to this column at feedback@livemint.com
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First Published: Tue, Jan 05 2010. 09 11 PM IST