Apax’s iGate bids $1.2bn for Patni Computers

The Apax Partners-backed software firm iGate plans to take a majority stake in the Mumbai-based information technology company Patni Computers in a deal worth $1.2 bn.

The software firm iGate, backed by Apax Partners, has set its sights on the Indian tech company Patni Computers. In a deal worth an estimated $1.2 billion, iGate has agreed to buy a majority stake in the Mumbai-based company.

This includes a 45.6 percent equity stake from Patni’s founders as well as 17 percent stake from General Atlantic. General Atlantic first invested in Patni Partners in 2002 as part of its first private equity investment in the Indian subcontinent. General Atlantic had previously sought to sell its stake in Patni Computers, but that 2007 effort stalled when one of the firm’s trio of founders refused to sell his stake. At that time, Apax Partners had also expressed an interest in buying General Atlantic’s stake in the Indian company.

As part of the current deal, Fremont, California-based iGate has offered to pay $11 per share to General Atlantic as well as the firm’s founders. The price reflects a 9.4 percent premium over Patni’s close for 7 January. In addition to that $921 million sum, another $301 million is expected to be paid to minority shareholders who hold roughly a 20 percent stake of the company.

The acquisition, expected to be completed in second half of 2011, would include a mix of cash and debt financing. The bulk would come from debt issuance by iGate with the remainder coming from Apax-backed Viscaria, which would sell up to $270 million in issuance, convertible into iGate stock.

Nasdaq-listed iGate shares were trading at $19.50 as of 7 January, more than double the value seen in the first quarter of 2010.

Meanwhile, Apax last week suffered an unrelated setback when the Danish outsourcing giant ISS rejected a €5.5 billion bid by the firm.