Heading for the exit

Geometric Software founder Manu Parpia pares his stake for first time post HCL buyout

Manu Parpia is making his intentions very clear. The founder chairman of Geometric Software, post the company’s takeover by HCL Technologies, is paring his stake in the business that he founded in 1984.

Post the takeover announcement in April 2016, the share price of Geometric has gained 34% till date. Now, almost a year later, on March 3, Parpia for the first time sold 10 lakh shares in the open market for close to ₹26 crore. The country’s third-largest asset management company, Reliance Mutual Fund, picked up 752,500 shares (1.14% stake) for ₹19.5 crore through a bulk deal at ₹259.35 a share.

Parpia, who has gone public about his intention to move on after the transition phase is over, currently holds 30 lakh shares (4.76% stake) which are worth ₹81.32 crore.

In a disclosure to the exchanges on March 2, just a day before Parpia’s share sale, the Mumbai-based IT firm informed that the scheme of arrangement between HCL Technologies, Geometric and 3D PLM had become effective. The 58% stake held by Geometric in the engineering solutions provider 3D PLM Software Solutions, a joint venture between Geometric and French firm Dassault Systems, would not be part of the acquisition.

While Geometric’s management might be getting ready to hand over the baton to HCL’s top brass, its investors are not going anywhere. For instance, Rakesh Jhunjhunwala has maintained his holding with his stake moving down marginally to 18.5% from 19.5% at the end of December, 2012.

Among institutional players, Kotak Equity Fund holds 2.07% stake, while banking and investment firms like France’s Societe Generale (1.16%), Malaysia’s Cimb Bank Berhad (1.16%), Japan’s Nomura Singapore (1.76%) and Morgan Stanley (1.76%) hold other significant stakes. The close-ended investment company Apax Global Alpha (2.57%) and Copthall Maurtius Investment (1.75%) are other major shareholders in the company.

Thus far, Geometric has grown at a decent pace with the top-line growing at 11% CAGR over FY12-16 and bottom-line at 15.5% CAGR during the same period. For the nine-month period that ended December 31, 2016, operating margin stood at 28.5%. Going ahead, Parpia believes that maintaining margins of over 20% will not be a challenge once the integration is complete. That should be music to the ears of investors, who are more than eager to see that the marriage between HCL Tech and Geometric turns out to be a match made in heaven.