Global telecom giant British Telecom on Thursday sold 14.1 per cent stake in Tech Mahindra to institutional investors for about Rs.1,395 crore and said it would consider further share sale in the Indian IT firm in future.
U.K.-based BT Group (British Telecommunications Plc) is a co-promoter of Tech Mahindra, with the other being Indian business conglomerate, the Mahindra and Mahindra Group.
Pursuant to this transaction, the BT group has pared its stake in the Indian IT firm from 23.16 per cent to 9.1 per cent. In 2010, the BT Group had sold 5.5 per cent stake in Tech Mahindra to Mahindra and Mahindra (M&M).
The shares were sold through a series of open market transactions in the Bombay and National stock exchanges on Thursday and the deal was managed by global investment bankers JP Morgan and Credit Suisse.
BT sold a total of 17.9 million shares to various institutional investors for total gross cash proceeds of Rs.1,394.90 crore (158.6 million pound) at an average price of Rs.777.73 a share.
Tech Mahindra shares, on Thursday, settled 5.2 per cent down at Rs.792.15 on the BSE, after remaining under pressure for most part of the day. The stock had hit a low of Rs.775 early in morning trade, but managed to recover some lost ground.
“Following this sale, BT has a 9.1 per cent shareholding in Tech Mahindra but further sales may be considered in the future,” the U.K.-based company said in a statement after the deal.
“The financial impact of the disposal is expected to be treated as an income statement specific item in BT’s next financial results,” it added.
The group, however, said that Tech Mahindra remained a key supplier.
A Tech Mahindra spokesperson declined to comment.
BT is one of the world’s leading providers of communications services and solutions, serving customers in more than 170 countries.
Investment banking sources said that BT managed to sell more than the expected number of shares on Thursday, as it was initially targeting to dispose of just 5-10 per cent stake as of now and consider further stake sale at a later stage.
Sources have said that BT has been looking at part-sale of its stake in Tech Mahindra for quite some time, but has been waiting for the right market conditions to go ahead.
Tech Mahindra shares hit a 52-week high of Rs.887.70 earlier this week on August 27, prompting the investment bankers to plan the share sale for Thursday. They were open to the idea of continuing the sale on Friday as well, had a right price been not achieved. However, the shares managed to get a price better than earlier expectations for about Rs.760-765.
The Mahindra group is now in the process of merging its another IT firm Mahindra Satyam with Tech Mahindra. Shares of Mahindra Satyam, which have also gained considerably in the recent past, fell by about 2 per cent on the BSE on Thursday.
