Coffee Day Founder Remains Invested In Mindtree, Eyes Higher Price

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.

[Economic Times]


Analyst:

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.

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