UPDATE 2-iGate, Apax close to Patni Computer stake buy-source

* iGate-Apax to buy stake at about 500 rupees/share-source

* To make open offer for another 20 pct after deal-source

* iGate-Apax taking loans of $500 mln to fund deal

* iGate-Apax was competing with Carlye-Advent for deal

(Adds analyst quote, background, updates stock price)

By Sumeet Chatterjee

MUMBAI, Dec 27 (BestGrowthStock) – A consortium of Apax Partners and
iGate (IGTE.O: ) are close to buying 63 percent of Patni Computer
(PTNI.BO: ), a source with direct knowledge of the matter told
Reuters on Monday, in a deal valued at about $915 million.

The Apax-iGate consortium has offered about 500 rupees a
share for the stake, the source said, adding that a deal would
likely be announced early next week.

Patni shares closed at 486.40 rupees on the Bombay Stock
Exchange on Monday.

The consortium, which beat a rival team of Carlyle [CYL.UL],
Advent International and Akansa Capital to the deal, will make
an open offer for another 20 percent stake in Patni following
the agreement, the source said.

Talks to sell a stake in the software services exporter have
been going on for about two years, but Patni has failed to seal
a deal due to valuation gaps with potential buyers, sources
previously told Reuters.

“The Patni promoters have to do the deal. They just have to
extract that last drop,” Arun Kejriwal, strategist, KRIS. “And
if they (iGate-Apax) are going to raise debt for the
acquisition, then it will most likely burden Patni.”

The iGate-Apax consortium is taking a loan of about $500
million to fund the deal, the source said.

Patni, iGate and Carlyle were not immediately available for
comment.

Patni, a mid-sized IT services firm also listed in New York
(PTI.N: ), provides technology outsourcing services to industries
such as insurance, telecoms, utilities and retail.

Small and mid-cap Indian IT companies have been grappling
with tepid demand, high attrition rates and a rise in expenses,
resulting in reduced profitability for some.

The founding Patni brothers are selling their 46 percent
stake, while private equity firm General Atlantic is selling its
roughly 17 percent holding in the software services exporter,
sources have previously told Reuters.

Private equity activity is surging in India, with $6.57
billion invested in the first three quarters of 2010, more than
double the $2.5 billion invested during the same period last
year, according to Venture Intelligence, a research firm.

Private equity firms typically make minority investments in
India, where entrepreneurs are often reluctant to sell out and
where full buyouts are rare.

Local media had earlier reported that private equity firms
including Apax and Providence Equity had shown interest in
buying BT Group’s (BT.L: ) stake in Tech Mahindra (TEML.BO: ) that
is likely to be valued at $830 million.
($1=45.16 rupees)
(Additional reporting by Bharghavi Nagaraju; Editing by Jui
Chakravorty and Jon Loades-carter)

UPDATE 2-iGate, Apax close to Patni Computer stake buy-source