Mindtree will buck the trend of IT consolidation, says CEO Rostow Ravanan

Rostow Ravanan says with founders at helm, company is best placed to protect sharehoders' interest; L&T board meet may take final call

Amid V G Siddhartha’s stake sale plans in Mindtree, management of the mid-tier IT services firm exudes confidence that the company is in safe hands with the founders at the helm. The assurance comes at a time when industry sources say L&T, one of the lead suitors, is likely to hold its board meet next week to chalk out a plan for buying out stakes in the firm.

Siddhartha, the founder of Coffee Day Group, is the single-largest investor of Mindtree, and is in advanced stage of discussions with a clutch of entities such as private equity and a technology firm to offload his 21 per cent in the IT firm. But, with founders' reluctance to shed their stakes of around 13.32 per cent, the situation has turned tricky.

In reply to a specific Business Standard query, Rostow Ravanan, chief executive officer (CEO) of Mindtree said the Bengaluru-headquartered company could buck the trend of consolidation that is happening in the mid-tier IT services space globally.

 “Absolutely, the shareholders of the company are in best hands with founders at the drivers’ seat. Mindtree has been an outstanding investment since our IPO in 2007. It is a board-managed company and we have a fully engaged and thoughtful board who keeps the interests of all stakeholders in everything that we do,” he said.

“We have the right strategy and have made the investments required to succeed."

Though highly placed officials in the company denied any chance of a rival technology firm buying out Siddhartha's stake, sources in the know however said that L&T Infotech is leading the bidding race as of now.

“L&T, the parent company of L&T Infotech, is likely to hold its board meet next week to chalk out a plan for buying out Siddhartha’s stake in Mindtree," a person familiar with the development said. 

Currently, apart from LT Infotech, private equity firms such as KKR & Co., Baring Private Equity Asia and Fairfax are also in the race.

“Though there are many suitors, L&T seems to have a clear upper hand," the source added. Reportedly, leading bidders are willing to pay around Rs 950-Rs 1,000 per share to Siddhartha, which closed 2.92 per cent higher at Rs 934.85 on Friday.

In January, AM Naik, executive chairman of L&T Group, had confirmed the engineering major was looking at acquiring stakes in Mindtree.

“We have not made up our mind (with regard to acquisition of Mindtree). Obviously, (if there are) any good propositions in the market, we will be interested in. But Mindtree is not the only one. There are number of other companies available," Naik had said to a private TV channel.

Mindtree, which is all set to reach a revenue run rate of $1 billion by the end of this fiscal year, has around 45 per cent of its total revenue coming from digital services.

Key Points

 

• Management of Mindtree is confident of bucking of trend of consolidation seen in mid-tier IT firms space
• L&T Infotech is seen leading the race for buying out Siddhartha's stake in Mindtree
• KKR & Co, Baring Private Equity Asia, Fairfax among others are also in the race 
• Founders of Mindtree are preferring a financial investor over any rival technology firm 
• The IT firm is at the cusp of its next growth phase as it is likely to touch a revenue mark of $1 bn in FY19