Tech Mahindra

Tech Mahindra to Increase Stake in Satyam to 44%

July 2 (Bloomberg) -- Tech Mahindra Ltd. plans to raise its stake in Satyam Computer Services Ltd. to about 44 percent, tightening control in a bid to hasten the software exporter's recovery from India's biggest corporate fraud.

Satyam rose as much as 5.3 percent in Mumbai trading after Tech Mahindra's Chief Financial Officer Sonjoy Anand said the software provider may spend as much as 11.5 billion rupees ($240 million) buying new shares to raise its holding from 31 percent.

The investment may reinforce confidence that Satyam has the financial resources to weather a slump in orders that followed founder Ramalinga Raju's January admission that he overstated assets by $1 billion. Satyam shares have jumped 63 percent since Pune-based Tech Mahindra won control at an auction on April 13.

"Minority shareholders are convinced that they have a strong promoter shareholder who is running the show," said P. Phani Sekhar who manages the equivalent of $13.5 million including Tech Mahindra shares at Angel Broking Ltd. in Mumbai. "It's good for Satyam."

Satyam climbed 5.1 percent to 76.95 rupees as of 2:22 p.m. in Mumbai trading while Tech Mahindra rose 2.9 percent to 769 rupees. The benchmark Sensitive Index declined 0.5 percent.

Tech Mahindra, partly owned by BT Group Plc and controlled by India's largest sport-utility vehicle maker Mahindra & Mahindra Ltd., will acquire the new stock after receiving "no significant" acceptances from shareholders for its tender offer, Anand said in a telephone interview. The offer to buy as much as 20 percent of Satyam at 58 rupees a share closed yesterday.

Spending the same amount on new shares as it had set aside for the offer would raise Tech Mahindra's stake to "a little less than 44 percent," Anand said.

"Tech Mahindra is doing the right thing," said Sekhar. "You won't be able to get it at 58 rupees again in your life."

The figures on the number of acceptances at the tender offer will be disclosed on or about July 8, Tech Mahindra said in a statement to the Bombay Stock Exchange yesterday.

To contact the reporter on this story: Harichandan Arakali in Bangalore at harakali@bloomberg.net