Indian groups’ listings will cut UK ties

Two Indian technology companies are likely to achieve valuations of $1bn with public offerings that will lead to the exit or reduction of stakes held by their British co-founders.

BT Group, the UK telecoms company, will dilute its stake in Indian joint venture Tech Mahindra, the country’s largest telecoms services company, through an IPO to be launched next week.

British Airways will end its equity relationship with WNS, one of India’s largest business process outsourcing companies, whose US shares started trading in New York on Wednesday.

The offerings should catapult Tech Mahindra, whose recent re-branding dropped the BT name, and WNS into a growing band of about 80 Indian companies whose market capitalisation is about $1bn.

BA has reduced its shareholding in WNS over several years and its sale of a rump 14.6 per cent stake concludes a partnership that took off in the early 1990s, when the UK carrier set up an outsourcing unit in India to manage ticketing, effectively seeding the country’s dynamic offshore call-centre industry.

WNS Holding, the parent of the Indian BPO operating unit, WNS Global Services, has raised $250m from the sale of a 28 per cent stake, including a greenshoe option, through an issue of American Depository Shares on the NYSE. Its shares traded at $21.60 in New York on Wednesday.

After the listing, private equity firm Warburg Pincus remains the largest single investor in WNS, with 53.6 per cent, down from 64.7 per cent.

BA will continue to be a customer of WNS, and the third largest source of revenues. WNS’s sales climbed to $203m in the financial year to March, largely from travel-industry customers.

Bankers are hoping Tech Mahindra’s IPO will rekindle the Indian primary issuance market, a casualty of the volatility in share markets since mid-May. Advisers say about 15 new issues have been delayed, including a bumper offering by DLF, the country’s largest construction company.

Tech Mahindra, which will start marketing its offering in London and Singapore from Friday, will raise about $95m from the sale of an 11 per cent stake of the post-issue paid up capital.

BT will divest a holding of nearly seven percentage points, taking its stake to 36.24 per cent. The share held by Mahindra & Mahindra, the Mumbai-based conglomerate that set up the joint venture 18 years ago, will fall from 56.1 per cent to 51.3 per cent.

Tech Mahindra increased revenues 31 per cent to Rs1.24bn in the year to March.

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