The two-year-long efforts of Satyam Computer Services to offload its stake in Nasdaq-listed Sify seem to be coming to an end finally.

According to sources, the software major is negotiating with two Singapore and Hong Kong based funds to divest its 35 per cent stake in the Internet service provider.

The recent spurt in Sify's stock price on Nasdaq to over $7 and a subsequent fall to the current level of $5.5 has also prompted Satyam to search for a buyer and close the deal as early as possible, the sources said.

If every thing goes well, the deal is expected to be completed within the next three months, he added.

However, when contacted, V Srinivas, chief financial officer of Satyam, denied the development.

Satyam currently holds about 1,21,82,600 shares in Sify, comprising 35 per cent of the total paid-up capital of Rs 34.83 crore (Rs 348.3 million).

The wait for a better deal seems to have paid off now with an increase in Sify's share price in the recent past.

If fully divested at the current ADR price of $5.5, the company could realise about $67 million from the sale proceeds.

"We believe that both the companies would gain by becoming 'pure play' companies in their respective spaces: Satyam in IT services space and Sify in Internet. We have been receiving interest from prospective strategic investors to buy Satyam's stake in Sify from time to time.

"However, we are looking for an attractive valuation," B Ramalinga Raju, Satyam's chairman, had said in January 2002, while officially announcing their decision to sell Sify stake.

Though Satyam could not get a better deal since then, it could dilute its stake in Sify's equity to 35 per cent from the 52.5 per cent in October 2002 by roping in two new investors, SAIF and Venture Tech, which have combinedly invested $20 million to acquire 32.87 per cent stake at a price of $1.72 a share.

Post-new investors' entry, Sify could post better results and turned cash positive with a cash profit of $0.23 million for the last quarter of 2002-03.

Its revenues were up by 52 per cent over the corresponding quarter of the previous year, at $12.8 million and 17 per cent higher sequentially.

Satyam is always lucky while dealing with its erstwhile subsidiary's equity.

The company earlier sold 3,47,200 equity shares (1.6 per cent of Sify's equity) of Infoway (Sify) at $144 a share in May 2000 to Government of Singapore Investment Corporation (GSIC) for an aggregate amount of $50 million.

GSIC had a put option to sell the shares back to Satyam if Sify did not complete an IPO by September 2001.

Satyam was required to repurchase the shares at a price equal to the average Nasdaq closing price before the exercise of put option, discounted by 41 per cent.

Sify did not complete the IPO and the put option held by GSIC expired unexercised on October 15, 2001, since the latter did not wish to sell the shares at the then prevailing price of $1.