Satyam to decide on qualification criteria for bidders

26 Feb 2009, ET Bureau

HYDERABAD: The Satyam board is likely to finalise the pricing guidelines for preferential allotment to a strategic investor and the criteria for shortlisting potential bidders at a crucial meeting on Thursday.

The board is expected to set experience in the IT sector and financial parameters like net worth as qualification criteria as it seeks to keep out ‘undesirable’ and ‘frivolous’ parties from the bidding, a person familiar with the situation told ET. Once the bidding criteria is decided, it will have to be approved by the Company Law Board, said the person. Similarly, the pricing norms will have to be approved by Sebi.

“Goldman Sachs and Avendus, the two board-appointed investment bankers, can formally begin the process of marketing the process to bidders once these approvals are secured,” added the source.

Though the IT factor will rule out standalone private equity firms, these entities can still make a joint bid with an IT firm. Another person familiar with the situation said such consortiums were already in the process of being formed. “We prefer the buyer to have some experience in the IT sector. Satyam is an intrinsically good firm with some reputed clients and competent employees. So we want the suitor to be interested in running the company in the long term and not cash out after short-term gains,” said a person privy to the move. He said if a private equity firm has to qualify in the bidding, it should prove it has a strong management team in place to run a big IT company like Satyam.

MARRIAGE PORTAL ON AGENDA

To finalise the pricing guidelines for preferential allotment to a strategic investor and the criteria for shortlisting potential bidders.

RIGHT FIT

Board is expected to insist on experience in IT sector and specify certain financial parameters such as minimum net worth. This is to weed out 'undesirable' and 'frivolous' parties from the bidding process. PE players can make only joint bids with software firms due to the IT experience factor.