Bhavook Tripathi’s name may not ring a bell in Mumbai’s flashy financial markets. But the little-known equity investor from Pune , with a net worth over ₹1,000 crore and holding in just a single stock, has the key to the success of global private equity major Blackstone’s multi-million dollar takeover deal of R Systems International, a leading provider of information technology and BPO services.
Usually, it is seen that an acquirer makes an open offer for 26 per cent stake, which is the regulatory requirement. But in this case, Blackstone announced a ‘conditional open offer’ to buy a 38-per cent stake in R Systems on Thursday after entering into a deal to purchase a majority stake in the company from its founder promoters Satinder Singh Rekhi and others.
Blackstone will acquire the promoters’ 52 per cent stake for $359 million or ₹2,904 crore at ₹245 a share. The share price of R Systems zoomed 15.66 per cent to close at ₹271.10 on BSE with its market-cap touching ₹3,200 crore.
A key condition of the open offer is that Blackstone can cancel the stake purchase deal with the company promoters if 38 per cent stake in the company is not tendered in the open offer.
Tripathi’s crucial stake
How does Tripathi hold the key?
He is the largest non-promoter shareholder of R Systems with 36.93 per cent stake (1.40 per cent held via another entity). R Systems’ promoters own 51.67 per cent stake in the company. Hence, if Blackstone acquired full promoter stake and Tripathi tendered his stake, it is only then that the private equity players will be able to de-list the company.
Market experts say that usually Blackstone not only acquires a controlling stake, but also de-lists the company from the bourses since it likes to be the single-largest beneficiary in a company’s growth. Only if Tripathi tenders his full stake in the offer will Blackstone’s holding in the company reach over 88 per cent, which is just 2 per cent short of 90 per cent that can trigger the de-listing of the company.
But if Tripathi has other ideas, Blackstone would fall woefully short in executing its plan and hence it has kept the option open to cancel its deal with the promoters, sources said.
“Share price will indicate where the wind is blowing,” said a regulatory-cum-financial expert. R Systems share price closed ₹25 higher than the open offer price of ₹246 on the first day of the announcement of the offer.
Tripathi’s investing style can be summed up in Gordon Gekko’s pithy words “I don’t throw darts at a board – I bet on sure things,” he has said during past interviews. Those who know Tripathi say he only bets on a single share at a time and rides the full rally till he feels the price has reached its fair value.
In 2011, he held a 23 per cent stake in R Systems and had a unique style of ramping up his stake in the company — via a public open offer for ₹122 per share.
In 1999, Tripathi made his first big call on FAG Precision Bearing, a company engaged in the business of high-precision ball bearings to leading automobile companies. The stock turned out to be a multi-bagger. Later in 2006, he picked Solvay Pharma from the money he made in FAG and then came R Systems.