INDIA BUSINESS WORLD - MAY - JUNE 2007
The Month that was ...

FEUDING BROTHERS LEAVE PATNI VULNERABLE TO SUITORS

Even as the fight among the Bajaj brothers simmers, another one is brewing at India's oldest software firm, Patni Computer Systems. Cracks have developed between the three Patni brothers, the founder promoters who together own close to 44% in the firm that's more famous for being the launchpad of Infosys founders NR Narayana Murthy and Nandan Nilekani than for being a top ten software exporter.

The fight may lead to a change in ownership with two of the Patni brothers, holding a combined 28% stake, and other investors looking to sell their stake. And the names being quoted as being interested range from multinational IT majors IBM and Computer Sciences Corporation (CSC) to private equity firms Blackstone and Carlyle.

According to people close to the situation, trouble has been brewing for a while in the family but now it has reached a point where Gajendra Patni and Ashok Patni, owning about 14% each in the company, have decided to sell a substantial part of their stake in the company. This goes against the wish the other brother, Patni chairman and CEO Narendra Patni, who wants to hold onto the company. Gajendra and Ashok are executive directors in the company. "Several investors are selling their stake," said a person familiar with the developments. Private equity firm, General Atlantic, which at one point held 21% in the firm, is also learnt to be selling its stake.

None of the stakeholders in the company were willing to comment on development. General Atlantic said it did not comment on its investee companies and an mail sent to Mr Narendra Patni went unanswered. He has been the public face of the company and his brothers have remained largely in the background.

Several firms including multinational software firms and private equity players are learnt to be in the race to buy a major chunk in Patni. "No final shape has been arrived. But things have started moving towards it," the source added.

While IBM, CSC, Blackstone and Carlyle are all reported to be keen, much of this will depend on how much stake is available. The multinationals players are unlikely to be interested if they don't get management control, in which case, a PE player could step in.

That a senior management reshuffle in Patni is on the cards and that some senior executives are likely to quit.

Shares of the company touched a 52 week high on the BSE at Rs 535.90. The shares ended marginally lower at Rs 513.90.