NIIT Ltd, the promoter of Delhi-based IT company NIIT Technologies, is looking to sell 25% in the company to a strategic investor. NIIT Technologies is a listed entity and a 25% stake sale would trigger an open offer for a further 20%, thereby giving the buyer management control of the company.
“Our position has been that the promoters will dilute 25% out of the nearly 40% stake held by them to a strategic investor. This will naturally lead to an open offer. However, at this point of time, we are not in discussions with any investors,“ said NIIT Technologies CEO Arvind Thakur.
Sources in the industry say the company has initiated discussions with investment bankers for the possibility of a stake sale to a global IT company.
The company has a market capitalisation of Rs 1,597.45 crore and has a P/E ratio of 14.43. This is significantly lower than the P/E ratios of companies such as Infosys Technologies which has a P/E ratio of 28.34 and TCS which has a P/E multiple of 28.25. The recent meltdown in the market and the appreciating rupee has resulted in a sharp decline in the NIIT Technologies stock price. In the last three months, the scrip has fallen over 25% and in the last one month, the scrip has lost over 19% at the NSE.
The size of a possible deal could not be ascertained as it depends mainly on the premium that the company can get. Sources say the company is looking at a high premium for the significant stake sale to strategic investors. “The management is looking at a high premium and thus keen to have a deal with a strategic investor. A deal with private equity funds is unlikely due to the premium expectations of the management,” said an industry source.
NIIT Technologies services customers in North America, Europe, Asia and Australia and focuses on specific industry verticals, including banking, financial services and insurance, travel & transportation and retail & manufacturing.
The company employs over 4,500 people and has four development centres in India and one each in the US, Britain and Singapore. According to the latest Nasscom survey, NIIT Technologies is ranked among the top 20 IT software services exporters in India.
NIIT Technologies has two subsidiaries — NIIT SmartServe Limited and NIIT GIS Limited offer business process outsourcing and GIS Solutions, respectively. Last year, the company acquired London-based Room Solutions, which has expertise in the insurance space.
Source: Economic Times