The four current founders of Mindtree together hold 13.32% stake and have ruled out selling their stake in the company
A hostile takeover of Mindtree is unlikely, said an analyst
At Mindtree Ltd, a hostile takeover is unlikely, thanks to influential investors such as Baburaj Pillai, who are believed to be backing the current management.
Pillai, who was instrumental in the return of Infosys Ltd’s founder N.R. Narayana Murthy to the company in 2013, is the founder of Singapore-based Arohi Asset Management Pte Ltd and has direct oversight over 2.4% of Mindtree’s stock.
Going by Pillai’s past record, analysts say it is unlikely that the media-shy investor will favour any new investor taking control of Mindtree.
Ditto for two other large investors—Pulak Prasad-run Nalanda Capital, which holds 10.61% , and Akash Prakash-led Amansa Holdings, which owns 2.77%.
“As far as Arohi and Amansa are concerned, I’ll be surprised if they vote for a change of ownership," said an executive, who has known the senior leadership team at the two funds for two decades.
“They (Arohi and Amansa) like the current management and have high regard for them. They won’t like any new buyer to come in and do anything, which will affect the company’s performance," said the first executive cited above.
While a number of funds are invested in Mindtree, some of them are index funds, which are unlikely to disturb the management. However, even direct investors in the company appear to be backing the current management.
Any new investor will need support from one of these large investors, who together own 15.8% stake in Mindtree.
To be sure, many of these investors may change their minds if the new investor agrees to pay a high premium over the current stock price.
The four current founders of Mindtree together hold 13.32% stake and have ruled out selling their stake in the company.
Mindtree, which was founded in 1999, risks a change of ownership as V.G. Siddhartha looks to sell his stake to steer through financial challenges faced by him in running his other businesses. In addition to a direct holding of 3.33% equity, Siddhartha also owns 10.63% through Coffee Day Enterprises Ltd and 6.45% through Coffee Day Trading Ltd, bringing his total ownership to 20.41%.
“The current management has covered its bases and reached out to all the large shareholders. So it’s very unlikely that there will be a hostile takeover," said an analyst at a foreign brokerage in Mumbai, requesting anonymity.
A hostile takeover of Mindtree is unlikely, said an analyst.
“The Mindtree management has set a high bar for any new strategic buyer seeking control and looking to further improve operational performance and value for the Mindtree shareholder," JPMorgan Chase analyst Viju George said in a 22 January note .
“Over 3-year, 5-year, 8-year and 10-year periods , Mindtree has operationally outperformed its India peer set," the note said.
Emails sent to Arohi, Nalanda Capital and Amansa Holdings seeking comment remained unanswered. Mindtree also declined to comment.