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CHENNAI, June 11

THE HMA STARware Ltd, a closely-held firm, is to become fully private as HMA Data Systems, which has 83.5 per cent stake in HMA STARware, plans to buy out the remaining 16.5 per cent stake from the public.

The HMA Data Systems would buy back 14 lakh shares from 600 shareholders including SMIFS Securities and Karvy Consultants by paying Rs 38 per share, Mr Harish K. Murthi, Chairman and Managing Director, HMA STARware, told reporters here today. The buyback would cost Rs 5 crore, he said.

HMA STARware provides financial products and services, and is also involved in ATM (automated teller machine) transactions, and networking protocol.

It is learnt that investors who availed of a preferential allotment of HMA Starware's shares two years ago, were promised an exit route through an initial public offering.

Company sources indicate that with the markets being down, an IPO did not look promising and that HMA Data Systems had hence decided to provide an exit route to investors by buying back the shares.

Meanwhile, the HMA Group is also considering an IPO of India Switch Company, another group company, in 20-24 months. ISC made a turnover of Rs 12 crore for the fiscal year ended March 2003, and plans to end the 2004 fiscal with Rs 30 crore turnover, he said.

According to Mr Murthi, the book value per share of HMA STARware was Rs 37.5, and company's capital base was Rs 10 crore. The company made a turnover of Rs 9 crore for the fiscal year ending March 2003.

The investment for the buyback would be made from the sale proceeds the HMA Group got from divesting its 50 per cent equity stake to Diebold in the HMA-Diebold joint venture.

Mr Murthi, however, declined to provide the value of the divestment. The HMA Group would also invest about Rs 7 crore from the divestment proceeds in ISC Systems, he said.

The buyback offer letter was sent to the shareholders on Tuesday and would close on July 5, he said.

On divestment made by the HMA Group, Mr Murthi said as per the terms between the two companies, about 300 employees working in the joint venture firm, and a customer base of 70 banks in India, Nepal and Bhutan would be transferred to Diebold. The joint venture had about 4,500 ATMs in 68 cities in the country, he said.

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