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Investor coalition out to rescue Satyam

Institutional investors are looking out for a strategic investor to rescue disgraced Satyam Computer Services, with the current management of the 53,000-employee company all but gone.

india Updated: Jan 07, 2009 21:25 IST
Sandeep Singh

Institutional investors are looking out for a strategic investor to rescue disgraced Satyam Computer Services, with the current management of the 53,000-employee company all but gone. With no-one holding a majority, this is a bit like a hung parliament looking for deal-makers.

There has been talk of the company being bought out by IT firms and IBM and Tech Mahindra but no official word. Would be buyers have to walk a minefield of possibilities.

One institutional investor said they were also eyeing legal action against the auditors and the exiting management. The key point is, how does one keep a flock of customers, employees and relationships glued together in an industry based on services done by brain power and sensitivity.

Aberdeen Asset Managers holds the maximum stake of 3.53 per cent in the company. Fidelity Investment holds 3.4 per cent and the ICICI Prudential Life Insurance holds 2.47 per cent. Life Insurance Corp is also a key shareholder.

They have to get their act together. It is not clear if the January 10 board meeting will take place as scheduled.

“In order to protect the interest of the stakeholders we are evaluating all possible options and are in discussions with other institutional shareholders,” said a senior official with ICICI Prudential.

A senior official from another institutional investor on conditions of anonymity said that, “We will meet with the institutional investors over the next two days and we need to think whether we can get a strategic investor who can take management stake. The suitable entity can either be a private equity firm or an IT firm.”

“The shareholders can sit together and decide on who should be given the responsibility to run the company. They can also look out for some outside organisation that can pick up a sizeable chunk and acquire the management by virtue of that,” said a senior official at a leading business-consulting firm.

The company lost track after its questionable buyout of Maytas Infrastructure and Maytas Properties that it declared on December 16, 2008 of which the institutional investors took big offence forcing the company to backtrack. The independent directors resigned after this and Satyam appointed Merrill Lynch as its advisor, which Merrill Lynch refused to carry ahead after January 6.