Tech Mahindra to borrow money from Mahindra Satyam for buying Hutchison Global Services

MUMBAI: Tech Mahindra will borrow from subsidiary Mahindra Satyam to partly fund its $87-million acquisition of Hutchison Global Services, the Indian back office of Hutchinson Whampoa.

The deal, which many analysts worry may dampen near-term profit margins at Tech Mahindra, will draw on the 2,852-crore cash on the books of Satyam through an arm's-length loan. The back office unit buy-out came with $845 million worth of assured business, which analysts said came at unexpectedly low billing rates. "It is our intention to optimise fund usage between the two companies," a Tech Mahindra spokesperson told ET, in response to an e-mail. "All inter-company borrowings are at arm's length and based on market rates."