Seize the Opportunity: Hulst BV Empowers Positive Transformation with 26.63% Stake Sale in Coforge, Creating a Rs 7,400 Crore Impact

Coforge

In the latest business move, Hulst BV, under the control of Baring Private Equity Asia, has unveiled plans to divest its complete 26.63% ownership in Coforge, the mid-sized IT firm. This strategic step is anticipated to be executed through a significant block deal, with industry insiders disclosing key details.

Key Details of the Stake Sale

Strategic Disposition by Hulst BV
Hulst BV, a significant promoter of Coforge Ltd, formerly known as NIIT Technologies, has set in motion a significant shift in its ownership structure. Industry insiders familiar with the matter have revealed that the Netherlands-based Hulst BV is actively seeking to offload its entire 26.63% stake in the mid-sized IT firm. This move is slated to be carried out via a well-calculated block deal.

Floor Price and Market Context

The floor price for this stake sale has been firmly established at Rs 4,550 per share. This figure stands at a 7.4% discount when compared to the prevailing market price of Rs 4,901.95. This calculated discount is designed to attract potential buyers and facilitate a seamless transition of ownership.

Affiliation with Baring Private Equity Asia

Hulst BV is registered in the Netherlands and is under the ownership and control of funds directly affiliated with Baring Private Equity Asia (BPEA). This affiliation adds a layer of significance to the forthcoming stake sale and underscores the strategic implications of the move.

Deal Size and Transaction Scope

As per reliable sources, Hulst BV plans to sell a substantial chunk of shares amounting to 1.62 crore. This ambitious transaction is poised to translate to a deal size that hovers around Rs 7,400 crores. Such a substantial deal size speaks to the magnitude of this strategic initiative.

Historical Transactions and Context

Previous Divestment Moves

Hulst BV has a history of engaging in strategic divestment moves. In May, the company made waves by divesting a 3.5% stake in Coforge through an open market transaction. This divestment amounted to a notable Rs 887 crore and was executed at an average price of Rs 4,125.44 per share.

Evolution of Ownership

Notably, this is not the first time Hulst BV has undertaken a significant stake sale in Coforge. Back in February, the company offloaded a sizable 9.8% stake in the IT firm, adding to its history of tactical ownership shifts. This move highlights the dynamic nature of the company’s investment portfolio.

Private Equity Involvement

Baring Private Equity Asia, a major player in the private equity sector, initially acquired a stake in Coforge in 2019. The acquisition resulted in the firm holding a commanding 63.99% stake in Coforge as of the end of the March 2021 quarter. Subsequent strategic moves have led to a reduction in this ownership stake.

Current Ownership Snapshot

As per data available through the Bombay Stock Exchange (BSE), Hulst BV currently holds a significant 26.63% stake in Coforge as of June 2023. This ownership position sets the stage for the forthcoming stake sale and marks a pivotal moment in the company’s strategic evolution.

Financial and Performance Insights

Revenue Trends

In a testament to its financial performance, Coforge reported a sequential increase of 2.4% in revenue for the April-June quarter, amounting to a total of $271.8 million. In constant currency terms, the revenue growth stood at 2.7%, although it fell slightly short of the expected 3.5% sequential growth.

Rupee Denominated Revenue

From a rupee-denominated perspective, the company disclosed a revenue of Rs 2,221 crore for the June quarter. This represents a noteworthy uptick from the previous quarter’s Rs 2,170 crore. These figures were officially shared in a stock exchange filing on July 20.

Profitability and Exceptional Expenses

Coforge, a player in the mid-cap IT services arena, reported an impressive 43.9% surge in net profit, with figures reaching Rs 165.3 crore. It’s important to note that this increase was accompanied by an exceptional expense of Rs 52.3 crore in the preceding March quarter. This balance of profitability and exceptional expenses underscores the company’s strategic financial management.

Market Performance and Closing Remarks

Market Performance Snapshot

On August 23, shares of Coforge concluded trading at Rs 4,901.95 on the Bombay Stock Exchange, marking a marginal decline of 1.18%. Despite this, the shares have enjoyed a commendable 24% growth year-to-date, reflecting positive market sentiment.

In conclusion, the impending stake sale by Hulst BV, orchestrated by Baring Private Equity Asia, represents a pivotal move in the realm of mid-sized IT firms. The carefully calculated floor price and historical context of ownership shifts underscore the strategic implications of this maneuver. As the market watches this development closely, Coforge’s financial performance and profitability trends continue to command attention, further contributing to the dynamic narrative surrounding the company’s trajectory.

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