Apax lines up $800m Patni as first Indian buy

Family-owned Patni Computer Systems could be the first acquisition by global buyout firm Apax Partners in India, although it faces competition from rival buyout firms.

Global buyout firm Apax Partners is in early stage talks to buy a controlling stake in Bombay and New York-listed Patni Computer Systems, an Indian software company, for $800 million (€600 million), according to a source close to the company.

This would be Apax Partners first deal in India since opening its office in November last year. It would also be the second biggest buyout deal in India after Kohlberg Kravis Roberts’ $900 million acquisition of an 80 percent stake in Flextronics Software Systems last year, according to data compiled by Dealogic.

The source said the deal would probably be financed through the buyout firm’s $15 billion global fund. The firm opened an India office last November. Media sources said Neeraj Bharadwaj, Apax Partners’ India Country Manager was leading the deal.

According to media reports, rival buyout firms The Blackstone Group and The Carlyle Group are also considering bids, as are software companies IBM and Computer Sciences Corporation.

Three brothers, Gajendra, Narendra and Ashok Patni, started Patni in 1978. The company is one of India’s top ten software exporters, although its influence in India’s expanding $48 billion IT sector has declined over the last few years.

According to media reports, Gajendra and Ashok, who own around 28 percent of the company, want to sell their stake. Buyout firm General Atlantic Partners is also reportedly selling the 21 percent stake it bought for $100 million in 2002.

The third brother Narendra, Patni chairman and chief executive, with a 16 percent stake, told Indian television channel CNBC-TV18: “I am committed to this company and I have told the employees and customers that I am not selling”.

Patni’s share price on the Bombay Stock Exchange was down 1.02 percent at 555 rupees ($13.5, €10.1) at 15:18 pm BST.