Nalanda Capital gives up fight, sells Mindtree stake to L&T

Pulak Prasad led Nalanda Capital has sold its entire 10.6% stake in Mindtree in the ongoing open offer made by conglomerate L&T for the mid-market IT services company, people directly aware of the situation said. This will help L&T, which already owns 31% in Mindtree, to cross a significant hurdle and pave the way to increase its stake to over 51% in the company.
Nalanda, which had backed the Mindtree founders against L&T in Indian IT's first hostile takeover battle, did a surprising U-turn, possibly after coming under market regulator's lens, sources said.
Sebi sought a reply from Nalanda after proxy advisory firm InGovern Research wrote to the regulator last week expressing concerns whether the largest institutional investor in Mindtree was acting in concert with the founders. This piled up pressure on Prasad and Nalanda, which decided to offload shares hurriedly, sources said.
Concerns had also been raised if Nalanda believes there should be a higher price, then it should also make a counteroffer to the L&T bid, according to the letter seen by TOI. Nalanda had been asking some other institutional shareholders of Mindtree to push L&T to pay a better price (more than Rs 980 apiece) for the IT services company after resisting the hostile takeover.
Nalanda, which manages public market assets worth about $2 billion, had also publicly come out in support of the Mindtree management.
Shares of Mindtree were trading at Rs 959.95 on NSE, down slightly by 0.88% on Monday morning. L&T has made the open offer at Rs 980 per share, and at Nalanda’s average investment price of Rs 260 per share the Singapore-based firm will be making a significant profit.
Sources said some of the global sponsors invested in Nalanda also asked the fund to step back, especially since it had already made significant profit on Mindtree shares. Another institutional investor Amansa Capital sold its 2.6% in Mindtree on Friday. UTI Asset Management is likely to offer it's around 3% holding later this week.
Last week three L&T representatives, including CEO SN Subrahmanyan, also got seats on the 12 member board of Mindtree as non executive directors.