Mumbai: Oracle Corp. on Wednesday said it will cut its current 80.3% ownership stake in Oracle Financial Services Software Ltd to 75% as required by the Indian capital markets regulator.
Shares of Oracle Financial lost 3.89% to close at Rs.2,602.95 per unit on Wednesday. At Wednesday’s market price, the value of the 5.3% stake in Oracle Financial (formerly i-Flex Solutions Ltd), which the company will have to sell to meet the requirement, is approximately Rs.1,153 crore.
Oracle intends to sell the minimum portion of its shareholding in the company to meet the legal mandate through an offer for sale (OFS) transaction.
“The timing and size of the OFS will be subject to market conditions, receipt of any necessary approvals, and other considerations; and this announcement does not constitute an obligation on Oracle to divest any stake held in OFSS (Oracle Financial Services),” the company said in a media release.
“Oracle is committed to continuing its strategic relationship with OFSS and expects to otherwise maintain its position as the majority owner and promoter of OFSS,” the company said in the release.
Morgan Stanley India Co. Pvt. Ltd and Deutsche Equities India Pvt. Ltd have been appointed as brokers for the proposed stock sale.
For the full year ended 31 March 2012, OFSS had posted a revenue of Rs.260.56 crore. In the December 2012 quarter, the company posted a net profit of Rs.25.5 crore compared with Rs.17.95 crore in the September quarter. Its revenue in the same period was Rs.72.61 crore compared with Rs.65.99 crore in the preceding quarter.
The company has not declared its March-quarter earnings.
The OFS window is very similar to the follow-on public offer (FPO) wherein promoters approach the market to either sell their own holding in the company or raise fresh capital. OFS scores over FPO since companies do not necessarily have to go through the lengthy process of issuing the prospectus and then wait for days to receive applications from investors before the issue is completed. This one saves time for both promoters and investors.
While the $37 billion Oracle does not break up its India figures, industry estimates peg its revenue from the country at around Rs.10,000 crore.
Dataquest, a CyberMedia publication, estimated Oracle India’s revenue at Rs.9,208 crore for fiscal 2012. The company has about 30,000 employees in India working for its global services and research and development divisions, about 10,000 for Oracle Financial and about 1,500 for its local operations.