iGate, Apax close to Patni Computer stake buy: Source

A consortium of private-equity firms Apax Partners and iGate are close to buying 63 percent of Patni Computer, 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 Rs500 a share for the stake, the source said, adding that a deal would likely be announced early next week.

Patni shares were trading at Rs488.50 on the Bombay Stock Exchange on Monday.

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

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.

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

Talks to sell a stake in Patni have been going on for about two years, but Patni had failed to seal a deal due to valuation gaps with potential buyers, sources had previously said.

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.

Patni, a mid-sized IT services firm also listed in New York, provides technology outsourcing services to industries such as insurance, telecom, 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.