Coffee Day Group founder V.G.Siddhartha’s may wait longer and realise a higher price to offload his stake in Bengaluru-based midtier IT service firm Mindtree, an investment he has retained for nearly two decades, sources close to the promoters told ET. Talks of Siddhartha’s exit from the Bengaluru-based Mindtree has been speculated ever since he stepped down as a board member in March. He retains 20.45% in Mindtree personally and through Coffee Day businesses.
Analysts say mid-tier companies such as Mindtree are struggling to attract good valuation from private equity investors.
“Mindtree revenue is over $850 million, with that kind of money it is hard to convince a PE to invest additional investments that runs into a few hundred million dollars. This is not a story just limited to Mindtree. A lot of mind-tier services companies are struggling to get the right investment from the PE investors to ride the wave of digital,” said Sanchit Vir Gogia, chief executive of Greyhound Research, a technology advisory.
He added that the bigger struggle will also to convince PEs to invest say $250 million in IT services and stay for the next 4-5 years. “Let’s draw some corollaries: IBM started losing money for 16 quarters before turning profitable again. That is a great example of how IT services companies will have to invest and stay put,” Gogia said.
Sanchit Vir Gogia: Sanchit is the Chief Analyst, Founder & CEO of Greyhound Research, a Global, Award-Winning, Technology & Innovation Research & Advisory firm. To read more about him, click here.
Have a question on this or other Technology & Innovation topics? Click here to set up an enquiry call with Sanchit Vir Gogia.
Copyright © 2018 Greyhound Research. All rights reserved. You may share this research note using the options made available. Please don’t copy this research note (complete or parts) and distribute over the web and emails. Connect with us if you need clarifications.