iGATE joins the rat race to acquire rival, Patni Computers

By SiliconIndia   |   Tuesday, 30 November 2010, 03:52 Hrs   |    5 Comments
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iGATE joins the rat race to acquire rival, Patni Computers
Mumbai/Bangalore: iGATE joins the rat race to acquire its long time rival Patni Computers. It has pitched in for a loan of $500-600 million from deutsche Bank and also plans to raise the rest of the capital for the acquisition from private equity giant Apax Partners, report Boby Kurian and Sujit John of Times News Network.

Carlyle Group and Advent International are currently leading the race bidding at $1 billion and Japan's NTT Data is also a close contender in the race.

iGATE, with over $100 million in cash or cash equivalent, has negligible debt on its books at present giving it enough flexibility in raising the loan. A potential acquisition by iGATE could create a combined entity with annualized revenues of over $1 billion, making it the latest entrant to the billion-dollar league in the Indian IT services play. Patni's revenue is estimated at $700 million, while iGATE could be tracking $300 million in the current year. The fact that GE is one of the biggest customers for both iGATE and Patni is also one of the reasons that could make is acquisition successful.

Phaneesh Murthy, Chief Executive of iGATE has been hard at work in stitching up an audacious and substantially leveraged acquisition. Murthy, who is considered one of the more dynamic honchos in the IT sector, has been on the prowl for a game-changing deal and had even vied for the scam hit-Satyam Computer, which was eventually acquired by Tech Mahindra.

Murthy is said to be eager to build scale for iGATE, which would put him in a much better position to compete for large IT deals that now tend to go to biggies like TCS, Infosys, Wipro and MNCs.

Three brothers, Ashok, Gajendra and Narendra Patni , jointly hold a 45.88 percent stake in the company, while General Atlantic Partners has a 17 percent stake. A successful bidder could end acquiring up to 80% stake.

Also if the bid emerges successful then iGATE will be called as Patni-iGATE.

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