Sebi Probes Patni Delisting on Shareholders’ Complaints

Some shareholders have complained that iGate has announced plans to delist Patni without first reducing stake to 75%; Phaneesh Murthy says co has got nod for all its plans

The capital market regulator is inquiring if technology outsourcer Patni Computer Systems can delist without lowering its promoter stake to 75% as mandated by law. 

The move follows complaints by some shareholders in Patni alleging that USbased software maker iGate has violated norms by announcing delisting of the Indian company without first paring its stake from 83% to 75%. 
"The regulator is looking into it after some shareholders complained," said a person familiar with the matter. 
In a public announcement on January 11, 2011, iGate had said it would delist Patni shares, after completion of the open offer, under the Sebi (Delisting of Equity Shares) Regulations 2009. But Sebi objected to the delisting after the open offer. The regulator, however, approved the open offer after the acquirer gave a commitment that it will not delist Patni without bringing down its stake. 
"Sebi cleared the open offer after an understanding that it will not delist the company without bringing down the promoters stake to 75%," said a merchant banker familiar with the issue. He said after this, Patni released a corrigendum in newspapers on March 30, 2011, withdrawing its earlier announcement to delist. 
After the open offer, the shareholding of the acquirers reached around 83%. However, on November 16, Patni again announced its plan to delist by bringing down the promoter stake. 
iGate Patni CEO Phaneesh Murthy told ET: "We have followed all laws and havegot all approvals for whatever we are doing." Sebi did not respond to ET queries. 
Murthy has repeatedly said in the past that the company will bring back the shareholding of promoters in line with regulations. 'Yes, whatever are the current norms… we will comply with them and one of the norms, like you said, is very clear that we have to try and bring it down to 75%. You typically get a year to plan that out and do that. So we do not anticipate that we will be running foul of any of the regulators," he had told ET NOW on June 28, 2011. 
According to a ministry of finance notification, "every listed company shall maintain public shareholding of at least 25%. If the public shareholding in a listed company falls below 25% at any time, such company shall bring the public shareholding to 25% within a maximum period of one year from the date of such fall." Patni scrip touched a one-year low of . 250 in August last year due to bad market conditions and news that shares will not be delisted before bringing down the promoter stake. It closed at . 466 on Friday. 
An iGate-led consortium had clinched a deal to buy nearly 63% stake in India's sixth-largest IT firm Patni Computer for about $1.2 billion by buying the entire 45.6% stake of Patni brothers — Narendra Patni, Ashok Patni and Gajendra Patni — along with General Atlantic's 17.4% stake. The acquirers also bought another 20% from the public at . 503.50 a share via the mandatory open offer route.