VG Siddhartha made a profit of Rs 2,858 cr from his Mindtree stake sale to L&T

Apart from the profits on sale of his 20.41% stake to L&T which amounts to Rs 2,858.74 crores, the CCD founder has also earned close to Rs 180 crores just through dividends from Mindtree in the last decad

By Mudit Kapoor  
Wednesday, March 20, 2019

VG Siddhartha has earned a profit of close to Rs 2,858 crores from the sale of all his stake in Mindtree to L&T. Siddhartha who is the founder of CCD (Cafe Coffee Day) had started investing in Mindtree over a decade ago and gradually accumulated 20.41 per cent stake in Mindtree until 2019. On March 18, 2019 Larsen and Toubro (L&T) bought his entire stake for a price not exceeding Rs 3,269 crores.

Over a period of eight years, Siddhartha bought his stake in Mindtree at a price close to Rs 435.79 crores. He sold 2.5 lakh shares at the price of Rs 122.33 in 2012 amounting to Rs 25.52 crore, followed by a minor sale of 250 shares in 2018 at a price of Rs 864 per share which amounted to Rs 2.16 lakh. After these deductions, the effective cost of investment that VG Siddhartha incurred while buying all his stake in Mindtree comes to around Rs 410.25 crores. The consideration paid by Larson & Toubro to acquire CCD founder's stake as per BSE filing is Rs 3,269 crores. This implies that VG Siddhartha made a profit of Rs 2,858.74 crores by selling his stake in Mindtree.

L&T bought the stake from VG Siddhartha to gain a minimum 51 per cent in Mindtree which would give the infrastructure giant control over the IT firm. L&T is aggressively targeting all available stake to acquire Mindtree.

Apart from the profits on sale of Rs 2,858.74 crores, the CCD founder has also earned close to Rs 180 crores just through dividends from Mindtree in the last decade.

As per the latest shareholding pattern of Mindtree, VG Siddhartha and CCD entities held 20.41 per cent or 3.35 crore shares of Mindtree. As per a CCD notification on BSE (Bombay Stock Exchange), the sale price for the entire stake will not exceed Rs 3,269 crores. This implies Rs 975 was being offered per share to the CCD founder.

To sum it up, VG Siddhartha bought shares in Mindtree for anywhere between Rs 87-529 over a period of eight years and sold it at a price close to Rs 975.

Timeline of VG Siddhartha's investments in Mindtree

Following the stake sale, CCD said: "The proceeds would be used to pare down the Coffee Day Group's debt. This divestment supports the Company's business strategy to devote more time to its flagship coffee business." CCD's net debt stood at Rs 3,323.8 crores as on March 31,2018.

VG Siddhartha said: "This business restructuring allows us to sharpen our portfolio focus and devote more time towards the strategy for our coffee business. We remain committed towards achieving overall growth in our business by focusing on execution and increasing shareholder value. "

The transaction is expected to close in the first quarter of FY 2020 and is subject to customary closing conditions, including regulatory approvals being received.

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