Ashok Soota offloads 5.5% in MindTree for 94 crore

Ashok Soota offloads 5.5% in MindTree for 94 crore

Bangalore: Former MindTree Ltd chairman Ashok Soota sold half his 11% stake in the company in a block deal on the National Stock Exchange (NSE) for 94 crore, at a 19% premium to Wednesday’s closing price.

Soota, who unexpectedly left MindTree in January to start another software services company, said he didn’t know who the buyer was. MindTree identified the acquirer of the stock as existing investor V.G. Siddhartha of Café Coffee Day, whose Global Technology Ventures Ltd (GTV) already has a 6.7 % stake in the company.

MindTree said the stake will be held not by GTV but “one of the group companies of Siddhartha." Siddhartha is a MindTree director.

Soota said he would take a call on the remaining 5.5% stake that he holds at the appropriate time.

The purchase of the stake by an existing investor is an indication of his faith in the company, said MindTree managing director and chief executive officer Krishnakumar Natarajan. It was “a big positive" that the stake was purchased at a premium, he said.

MindTree’s fortunes have been mixed over the last few quarters, particularly following an attempt to make a smartphone that was later abandoned.

Net profit in the year to March slumped 50.6% in dollar terms from the previous year to $22.3 million (Rs 99.7 crore). While the bet on the wireless products business accounted for about $8 million of the $22 million decline in absolute terms, a lower mark-to-market gain over last year accounted for the remaining $14 million.

Soota announced the setting up of his new venture Happiest Minds Technologies Pvt. Ltd in May this year.

“I had said five months from that point, and things are on track. We are making decent progress," he said on Thursday. Some of the money raised may be used to fund Happiest Minds. “I haven’t decided yet."

Soota had said in May that the venture, an information technology (IT) services company with lines of business and offerings similar to that of other large and mid-size IT companies, including MindTree, will aim to be the fastest such firm to clock $100 million in revenue, in a period of about five years.

MindTree itself took about six years to reach the figure after its launch in 1999, he noted. The company at that point was the fastest to the $100-million mark. Soota announced his resignation as executive chairman and member of the board of MindTree on 28 January, citing “personal reasons".

He and nine other co-founders started MindTree, which currently has revenue of around $300 million, and led it from the start. Prior to that, he was president of Wipro Infotech Ltd from 1984 to 1999, where he grew Wipro’s IT business from $2 million to $500 million.

“My core competency is in creating large companies," Soota has said.

MindTree closed at 361 on NSE on Wednesday. Soota sold half the 4,44,3331 shares he owned. On Thursday, the stock closed at 396.6, up 10%.