Patni stake sale stalled

Mumbai-based Patni Computer System's stake sale has been stalled significantly, according to sources close to the development.

This time around, the reason for the delay is that there is "no common meeting ground" between the brothers. "While the two brothers kick-started the stake sale, they now do not want to dilute their entire stake in the company and want to continue having some rights and privileges in the company," said the source.

It has been rumoured that private equity players like Texas Pacific Group and Apax Partners were in the final lap of purchasing the shares of two Patni brothers and the due diligence was also in progress.

The two Patni brothers "" Ashok and Gajendra "" who want to sell their stake, together own about 29% stake in the company, which is the country's sixth largest IT services company. While General Atlantic Partners, which holds a 16.38% stake in the company, it has no such plans to exit in the immediate future, but as a financial investor will consider it (selling stake) if the price is attractive. Other institutions holding stake in the company include Merrill Lynch and UBS.

However, any stake sale will be possible only after Narendra Patni's consent since he has the first right of refusal. Sources said that even if Patni does agree to a stake sale by his brothers, he is unwilling to give up control over the company.

When contacted, senior vice-president of the company Deepak Khosla said, "The company cannot comment on the intention of individual shareholders. We have not received any confirmation from any of the major shareholders to divest their shares."

The share price of the company today was Rs 442.25 per on the BSE -- down 2.21% over the previous close. The stock reached its 52-high of Rs 572 on May 29.

An increased focus on margin improvement during the previous few quarters resulted in the IT major posting a net income (consolidated) of Rs 134.7 crore ($33.2 million) for the second quarter ended June 30, 2007 - an increase of 98.9 % compared with Rs 76.6 crore ($16.7 million) for the same quarter last year. Revenues for the quarter touched Rs 662.8 crore ($163.3 million) - a rise of 14.2 % from Rs 656 crore ($143 million) year-on-year.