Merrill arm picks up 5.5% in Scandent

Indopark Holdings Ltd, a wholly owned subsidiary of Merrill Lynch, has picked up a 5.55 per cent stake in Scandent Solutions for around Rs 133,65 crore in the form of bonds, convertible at Rs 217 per share.

The bonds carrying a interest rate of 5.22 per cent per year has been made in the parent company prior to its merger with the BPO arm, Cambridge Integrated Services.

Scandent claimed that the investment is a indication of the potential of the planned merger. Chris Sinclair, Executive Chairman and CEO of the Scandent Solutions said, "This investment is vindication of the potential that our merger with Cambridge holds for the company and will fund our growth in an exciting and expanding outsourcing market-place."

Scandent had revenues of around Rs 164 crore for the last four quarters, which is expected to go up close to eight times ($275 million) after the merger.

The stock has been falling since the beginning of the year, closing up more than four per cent today at Rs 167.70 and has been moving down since the beginning of the year. The current valuation is around 23 times the earnings per stock of the company for the last four quarters.

The recently listed company posted a net profit of around Rs 21 crore during the calendar year 2005 upon revenues of Rs 163 crore.

The stock had earlier touched a high of Rs 331 in September last year but slid to Rs 225 by the year-end after both net-profit and earnings per share went down by half over the past four quarters.

The merger with the healthier subsidiary is likely to show better figures for the company. The BPO arm was recently named one of the top three performing BPOs by Global Services media and neoIT, a leading offshore outsourcing advisory firm.

Scandent, said today, that post merger, the firm will have more than 3,500 employees at their 80 offices across four continents.

"With the merger, we will have more than 2,000 clients including Fortune 500 firms like Corporate Express, DHL, NASDAQ, Southwest Airlines and many U.S. and international state governments," it said in a release to the Bombay Stock Exchange.