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Is BT Divesting Stake in India's Tech Mahindra?

Ann All

Even as a very big outsourcing deal closed in the U.S., with HP completing its $13.9 billion purchase of EDS there came word of a possible smaller sale. British Telecom is reportedly considering divesting some or all of its 31 percent ownership stake in India's Tech Mahindra, reports the Financial Times.

 

According to the article, BT has determined that the joint venture doesn't mesh with its long-term strategy. That's a common reason offered by companies that sell their ownership stakes in offshore service providers, along with difficulties in controlling costs. The article cites General Electric and Aviva as companies that have completed such sales and Citigroup Global Services as a company reportedly considering one.

 

The article offers few concrete details and cites unnamed sources "familiar with the situation." Such sources seem to think a private equity firm would be the most likely buyer. BT is tight-lipped, saying only that it regularly reviews its global investments.

 

Tech Mahindra is reportedly worth about $2.2 billion and has grown 30 percent a year over the past three years, to become India's sixth-largest software services company. Indian conglomerate Mahindra & Mahindra owns the largest stake, about 41 percent. Some 65 percent of Tech Mahindra's annual revenues of $937.4 million come from BT.

 

In an interview with Moneycontrol, Tech Mahindra executive CP Gurnani insists no sale is planned.


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