Blue Star Infotech shares dip 20% on sale of IT business to Infogain

Blue Star Infotech Ltd (BSIL) shared dipped as much as 20 per cent in intra-day trade on Wednesday after it announced selling its IT business to Infogain Inc, a ChrysCapital portfolio company, for Rs 180.80 crore.

BSIL , an entity of the Blue Star Group, is selling its IT business its subsidiaries in USA, UK and Singapore for Rs 180.80 crore, payable upon completion of the sale, a company statement said.

BSIL will retain a real estate business and other assets, the fair value of which is expected to be around Rs. 96.7 crore, it added.

Following the completion of BSIL's IT business sale, it is proposed to merge BSIL with Blue Star with effect from April 1, 2015, subject to shareholder approval of the respective companies. In effect, by the way of the above merger, the residual operations of BSIL, namely a real estate business, together with other assets, will get integrated with Blue Star, it said.

Blue Star Infotech shares closed 19.98 per cent down at Rs 231.10 apiece on Wednesday.

Ashok M Advani, Chairman, Blue Star said, "The proposed merger enables the utilisation of capital that flows in to fund growth of Blue Star's core businesses and improve returns thereby creating long term sustainable value for all shareholders. It will also strengthen the balance sheet and provide financial stability in a volatile market."

"BSIL's IT assets are an ideal fit for Infogain with the vision of creating a leading new age digital services platform with combined capabilities in Cloud, Mobility, SAP, Analytics and Product Engineering," ChrysCapital Managing Director Sanjay Kukreja said.

Blue Star forayed into the IT space in 1983. In 2000, the Blue Star Group executed a strategic shift to hive off its IT business into an independent company, Blue Star Infotech, as this business necessitated specialised focus and was significantly different from its core business.