Intel to sell Rediff.com stake to Warburg
I am wondering if Intel is looking to sell PCCW investment... Intel had big earnings from VC investments in early 2000 and think this sale is to generate some VC income for weaker chip earnings. Just my thoughts. Merry
January 3, 2001 8:58am
Intel to sell Rediff.com stake to Warburg
Reuters
By Anshuman Daga
BANGALORE, India, Jan 3 (Reuters) - The investment arm of chip maker Intel Corp <INTC.O> is selling its stake in Indian Internet portal Rediff.com <REDF.O> to E.M. Warburg, Pincus & Co and its affiliates, officials and disclosures said on Wednesday.
Intel's sale of 645,000 shares in Rediff.com for $3.55 million translates to $5.5 per share. The consumer portal's American Depositary Share, which represents half an equity share, closed at $2- on the Nasdaq on Tuesday.
Intel's original investment in the stake and the exact timing of the sale were not immediately available. Officials of Intel Capital, the investment arm of the company, confirmed the sale but gave no other details.
Warburg's purchase was confirmed by filings to the U.S. Securities and Exchange Commission. Its officials offered no comment.
Analysts said the price at which Intel is getting for its stake was good news for Rediff.com's shares.
"We view this as highly positive, as it demonstrates significant support for the stock at levels below $3.00," Goldman Sachs analysts Rajeev Gupta and Snowy Tan said in a research note.
Rediff.com's stock price has taken a severe beating since its listing last June as investors' love affair with Internet stocks ended. The share is currently quoting near record lows and is sharply below its all-time high high of $28.
"Intel Capital's investment in Rediff.com sought to allow the company to create a richer online portal with enhanced audio and video capabilities which drive better users experience on the Internet with Intel processors-based PC," Intel Capital's spokesman said in an e-mail response to Reuters.
"Given that two years later, it has achieved Intel Capital's strategic objective of motivating enhanced computing content capabilities in India, we reviewed conditions for opportunities to sell the investment," Intel said.
Rediff.com, which targets Indians worldwide, was launched in 1996. It raised about $55 million in June 2000 through a U.S. public offering of shares.
Over the last two years, Intel Capital has invested in about 20 Indian firms including a subsidiary of information technology firm Hinduja Finance Corporation <HFIN.BO>.
WARBURG EYES REDIFF'S PROSPECTS
Warburg, which already had about 10 percent of Rediff.com, said in its regulatary filing:
"Warburg Pincus views the investment as attractive based on the company's business prospects and strategy and is very supportive of the management team and its ability to execute this strategy," it said.
Rediff's investors include venture capital firm Draper-India International, General Electric's <GE.N> affiliate GE Capital Services and the Indian arm of Hongkong media baron Richard Li's Pacific Century Cyberworks <0008.HK>.
Rediff.com cut its net loss to $0.11 million in the second quarter ended September 30, 2000 from $0.55 million a year ago.
The portal clocked page views of 158 million in September. while competitor Satyam Infoway's <SIFY.O> portal (www.sify.com) registered 105 million page views in the same month.
((Bangalore Newsroom, +91-80-558-1458, fax +91-80-558-1457, anshuman.daga@reuters.com))
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