Satyam offloads its 3% stake in dying Sify

by Hinesh Jethwani    Oct 07, 2003

Satyam Computer Services has sold 1m equity shares of Sify, reducing its hold in the company by a sizeable 3%.

The move brings down Satyams shareholding in Sify from approximately 35% to 32% now.

Satyam, the largest stockholder in Nasdaq-listed Sify, has sold the shares via a private placement through Sifys sponsored ADR programme.

The company has been trying to offload its stake in the Internet services company for over two years, and has been actively scouting for buyers during the last six months.

Venture Tech, a US-based venture capital fund, bought the stake on October 1 at Rs 198.9 per share, taking its stake in Sify to 16% from 13%.

Another investor, CDCs South Asia Regional Fund, is selling its entire stake of 10.6% or 3.6m shares in Sify through the same route. However, the sale is yet to be finalized.

The total size of the sponsored ADR issue was 4.6m shares or 13.6% of Sify. ICICI Securities is the lead manager of the companys sponsored ADR program.

“The shares were placed in a pool overseen by a lead manager so that buyers could buy at the same price under private placement. We appreciate the move by existing investors like Venture Tech, which have chosen to increase their stake further by buying from the pool. This shows their commitment to the companys business model, sources in Sify said.

This is the second sponsored ADR issue from Sify this year. In July ‘03, Sify completed the sale of 1,017,441 ADSs, representing 1,017,441 equity shares to Venture Tech. Satyam Computer was again a seller in this transaction and reduced its equity to 35% from over 38% earlier.

Sify had also raised money through a fresh issue of equity in ‘02. It sold 7.6m ADS to Softbank Asia Infrastructure Fund (SAIF) for $13m and approximately 4.1m equity shares to Venture Tech Solutions for $7m in October ‘02.

CDC SARF was one of the first venture funds to invest in Sify in February-March 1998. The fund now has exited its investment in the company but there is still a chance the shares might be picked up by another international fund of CDC. These shares are still in the pool and have not yet been allotted.

Tags: Satyam, Sify, Shares