BackBT exits Tech Mahindra, sells 9.1% for `1,011.4 crore
Phone firm completes sale of remaining shareholding of 11.6 million shares to institutional investors for 871.00 apiece
Premium(Shaun Curry/AFP )
Mumbai: Britain’s biggest fixed-line phone company BT Group Plc (BT) sold its 9.1% stake in India’s sixth largest software exporter Tech Mahindra Ltd for ₹ 1,011.4 crore through a series of block deals on Wednesday.
A BT note to the London Stock Exchange, where it is listed, said it had “completed the sale of its remaining 9.1% shareholding (11.6 million shares) in Tech Mahindra to institutional investors for total gross cash proceeds of ₹ 1,011.4 crore (£115.7 million) at ₹ 871.00 per share".
A clutch of institutional investors including Segantii India Mauritius, Indus India Fund Mauritius Ltd and sub-accounts of many foreign institutional investors bought the shares from BT, exchange data showed.
Tech Mahindra’s shares closed at ₹ 910.80 apiece, up 3.69% on BSE.
On 30 August, BT had sold a 14.05% stake (17.9 million shares) for ₹ 1,395 crore in Tech Mahindra to institutional investors.
Alok Shende, founder and director of information technology (IT) research and consulting firm Ascentius Consulting, said: “BT had come on board of Tech Mahindra because they wanted to have a back-end entity and the whole rationale was having a financial stake. But the relationship has moved ahead in terms of quality of delivery and impact..
“Tech Mahindra is delivering a huge quantum of services to BT which BT is packaging and selling to its customers. One doesn’t need financial stake any more to achieve that," he added.
Since 2010, BT has been reducing its stake in Tech Mahindra, calling it a non-core asset. In its note to the London Stock Exchange on Wednesday, the British firm said: “Tech Mahindra remains a key supplier to BT."
Tech Mahindra was originally formed as a joint venture between BT and Mahindra and Mahindra Ltd in 1986 as Mahindra British Telecom. Later its name was changed to Tech Mahindra to reflect its diverse clients and services.
BT continues to be the largest client for Tech Mahindra although its contribution to Tech Mahindra’s revenue has fallen sharply from 45% in 2011 to 33% now.
According to Vimal Gohil, IT analyst at Asit C. Mehta Investment Intermediaries Ltd, BT remains a key client for Tech Mahindra. “It is a very strategic vendor to BT, but not the only vendor," he said, adding that since BT had been trying to contain costs and exiting Tech Mahindra, it might not continue to have Tech Mahindra as a strategic vendor for its key infrastructure IT services.
On its part, Tech Mahindra has been actively growing revenue from non-BT accounts to reduce its dependence on the British telecom company.
Tech Mahindra’s non-BT revenue in the second quarter of current fiscal year grew by 11%.
Acquisitions of business process outsourcing firm Hutchinson Global Services Pvt. Ltd and mobile value-added service provider Comviva Technologies Ltd in September has boosted Tech Mahindra’s revenue..
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