Ashok Soota sells 22.1% stake in Happiest Minds to ITC Infotech for Rs 1,330 crore to fund medical research and healthcare ventures

Synopsis

Ashok Soota is selling a significant stake in Happiest Minds Technologies for Rs 1,330 crore. These funds will support his medical research and healthcare ventures. ITC Infotech will acquire the stake as part of a merger plan. The combined entity aims for a USD 1 billion turnover by FY28. Soota will retain a minority stake after the merger completion.

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New Delhi: IT industry veteran Ashok Soota is paring a significant chunk of his stake in Happiest Minds Technologies for about Rs 1,330 crore to fund his ventures in medical research and healthcare.

The 83-year-old entrepreneur, widely regarded as one of the pioneers of the Indian IT services industry, is selling a 22.1 per cent stake in Happiest Minds Technologies to ITC Infotech as a precursor to a mega-merger between the two firms.

The proceeds are earmarked for his not-for-profit medical research trust, SKAN (Scientific Knowledge for Ageing and Neurological Ailments), and his healthcare venture, Happiest Health, Happiest Minds MD Venkatraman Narayanan told reporters.

Also Read: Happiest Minds rules out job cuts after merger with ITC Infotech

The management of Happiest Minds Technologies noted that the capital requirements for Soota's new ventures are "quite massive".

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SKAN, which focuses on research for ageing and neurological disorders, recently opened its first campus. Up next are plans to scale up to a 2-lakh square feet facility at an estimated capital expenditure of Rs 350 crore.

Similarly, Happiest Health, a health and wellness knowledge platform, requires between Rs 300 crore and Rs 400 crore as it prepares to transition into physical Hospitals.

Speaking at a press briefing, Narayanan said the strategic deal was structured such that it would provide Soota with the liquidity required for his philanthropic and new business goals without adversely affecting company's market valuation.

"Soota was looking to scale down or pare down his investments in Happiest Minds to fund his venture, Happiest Health, and also his not-for-profit organisation, SKAN. He would be funding that through the sale of shares of Happiest Minds," Narayanan said.

ITC Infotech, a wholly-owned subsidiary of conglomerate ITC Ltd, will acquire a 22.1 per cent stake in IT firm Happiest Minds Technologies for about Rs 1,330 crore, as part of a strategic deal to merge the two companies to form an AI-first enterprise with a USD 1 billion turnover by FY28.

The acquisition of 3,36,61,700 equity shares will be made from Happiest Minds' promoter Ashok Soota and Ashok Soota Medical Research LLP in two tranches, according to regulatory filings.

Soota's career spans over four decades. He spent over 14 years at Wipro, where he played a key role in its growth into a global IT powerhouse. In 1999, he co-founded Mindtree, leading it to a successful IPO before exiting.

At the age of 68, when most professionals retire, he founded Happiest Minds in 2011, which saw a stock market debut in 2020. Happiest Minds' management noted that while Soota had previously explored raising funds through open-market block deals, those moves could have had a negative impact on the share price and the morale of continuing shareholders.

The strategic sale to ITC Infotech was seen as the "best option" to secure a stable future for the company while providing Soota with the funds he needed to drive the next phase of expansion for his ventures.

Also Read: ITC Infotech to acquire 22.1% stake in Happiest Minds for Rs 1,330 crore; firms to merge

Under the agreement with ITC, Soota and his associated entities will sell the 22.1 per cent stake in two tranches at Rs 390 and Rs 400 per share, respectively.

Post-amalgamation, ITC Limited will hold a 73.4 per cent stake in the merged entity, while Happiest Minds' shareholders will hold the remaining 26.6 per cent.

Despite the divestment, Soota will not exit the business entirely. Following the completion of the merger with ITC Infotech - a process expected to take 15 months - he will remain a minority shareholder with a 7.55 per cent stake in the combined entity.