The smallest and youngest of India's big four information technology groups, HCL was founded by Shiv Nadar in 1991. Mr. Nadar has received bids for HCL in the past but has long said that he has no plans to sell. But now, the 69-year-old is open to considering selling his stake because his only child, daughter, Roshni Nadar, isn't interested in continuing in the technology business, one of the people said.
Ms. Nadar, 32, a graduate of Northwestern University in Chicago where she concentrated on television production and journalism, sits on the HCL Technologies board, and is the chief executive of its holding company HCL Corp.
Shiv Nadar controls 62% of Bombay Stock Exchange-listed HCL, and has yet to hire bankers to advise him on a sale, the people said. Mr. Nadar will only formally appoint advisers if he is satisfied with the potential offer, the people said. HCL Corp. Friday said it had no plans to exit. This after news of the planned sale was published.
"HCL Corp. denies any plans to exit HCL Technologies," the holding company of HCL Technologies said in a statement. HCL Corp. also owns Mumbai-listed computer hardware distributor HCL Infosystems Ltd.
HCL, along with bigger peers Tata Consultancy Services Ltd., Infosys Ltd., and Wipro Ltd., has been buoyed by the pickup in the U.S. economy and the weaker rupee, because it earns a chunk of its revenue from the U.S. HCL posted a 39% net profit gain, in U.S. dollars, for the three months ended December.
Proceeds from a sale by Mr. Nadar would be invested in HCL's health-care and education businesses that his daughter is spearheading, both people added. The Shiv Nadar Foundation, of which Ms. Nadar is a trustee, is already active in supporting education initiatives. The foundation runs an engineering college in the southern Indian city of Chennai and the Shiv Nadar University in the northern Indian state of Uttar Pradesh. The foundation also runs schools that teach impoverished children free.
In February, HCL Healthcare, a recently formed unit of HCL Corp. said it would invest $161 million over five years into the health-care and well-being business. HCL Healthcare runs a health-care delivery unit called HCL Avitas, which has collaborated with Johns Hopkins Medicine International to run multi-specialty clinics across India.
Mr. Nadar's son-in-law. Shikhar Malhotra, is the vice chairman of HCL Healthcare and the chief executive of Shiv Nadar School--a not-for-profit K-12 school initiative of the Shiv Nadar Foundation that aims to establish 25 schools across India by 2020. He is also a director and a board member of HCL Corp. Mr. Malhotra "drives [the foundation's] strategic initiatives and future road map," HCL's website said.
If the sale happens and a tender offer for additional shares held by minority shareholders is made in compliance with local rules, it could be the biggest stake sale in India ever. The biggest acquisition of an Indian company was in 2007, when Vodafone Group PLC agreed to pay $12.9 billion for a majority stake in Hutchison Essar Ltd.
The most recent such exit in the technology sector was when Baring Private Equity Asia agreed to buy a 68% stake in Indian software company Hexaware Technologies Ltd. for about $434 million from founder Atul Nishar and General Atlantic LLC in August 2013.
In January 2011, the founding brothers of Patni Computer Systems Ltd. sold their stake to a private-equity-led consortium in a deal valued at $1.22 billion. India's tech sector is a favorite of foreign investors, however, and was where most deals in the country took place last year. Data from Dealogic showed that there were 47 acquisitions of stakes in Indian tech firms last year valued at a total of $788 million, the highest in terms of deals among any sector.
After interning with television channels CNBC TV18 in India and CNN in New York, Ms. Nader worked for a year-and-a-half at Sky News in London. In 2006, Ms. Nadar decided to pursue her management program in social enterprise and management and strategy from the Kellogg School of Management at Northwestern in Evanston, Illinois. "That's where the world of philanthropy came about," Ms. Nadar said in a November interview with The Wall Street Journal.
HCL Technologies' stock price has more than doubled to 1,490 rupees ($23.97) a share in the past 12 months on the Bombay Stock Exchange, data showed. It earned a revenue of more than $5 billion for the calendar year that ended in December.
However, an investment professional questioned whether there would be any takers as Mr. Nadar would expect a premium over the market price to hand over control. Also, under current Indian rules, any acquirer must offer to buy a 25% stake in the company. That could cost an additional $4.21 billion and would take a potential acquirer's stake to 86.75% if all minority shareholders agree to sell their shares.
But local laws also require that no majority shareholder or founder own more than 75% in a listed company. That would leave a potential acquirer a tough choice--delist HCL Technologies by paying another $2.2 billion, or sell part of its stake to bring its shareholding in line with statutory requirements. Under Indian takeover rules, anyone buying more than 26% needs to offer to buy an additional 25% from minority shareholders.
The other alternative for a potential buyer would be to acquire only 50% of Mr. Nadar's stake, which is valued at about $8.4 billion at current market value. But they still have to make a tender offer if they acquire 26% in a company.