Satyam to allow non-IT firms to bid for the firm

By SiliconIndia   |   Friday, 27 February 2009, 09:52 Hrs
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Bangalore: The newly appointed board of Satyam Computer Services has decided to allow non-IT firms also to bid for the software firm. A person close to the development said PE firms with a partner will also qualify as bidders, reports The Economic Times. The move comes as a surprise as the Satyam board had earlier contemplated making prior experience in the IT sector as a qualification criterion.

"We have decided to open the window further, by allowing firms with managerial experience in the non-IT sector to bid for Satyam as long as they meet certain financial parameters such as net worth. Stand-alone PE firms will not be allowed to bid, but a PE player can make a joint-bid with a partner," said the source. Some consortiums are in the process of being formed.

Another source said that within the board itself there were also people with a view that the bidders should be restricted to firms with IT experience. But they could not drive that point home. "In the Indian software space a firm like Flextronics is being run by PE firm KKR," said this person.

The board, which met on Thursday, has asked the investment bankers Goldman Sachs and Avendus to formulate the guidelines for qualification. Sebi and the Company Law Board will have to approve these norms, the source said.

The board also inched closer to finalizing the pricing guidelines for preferential allotment to a strategic investor. "The board is expected to give its recommendations on pricing to Sebi in a day or two," this source said. Operational issues including cost-cutting were also discussed in Thursday's meet.

The company is likely to adopt a two stage process while selecting a strategic investor. It will invite expression of interest (EOI) from prospective bidders. The board will short-list bidders based on the qualification criteria. It will be followed by the strategic investor being selected from the short-listed bidders through an auction process that would be overseen by a retired Supreme Court judge or the former Chief Justice of India.

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