Mahindra Satyam seems to be winning back the faith of foreign investors as their holding in it has crossed 20 per cent mark for the first time since it was hit by the accounting scandal, considered the country's biggest ever corporate scam, more than three years ago.

The foreign institutional investors (FIIs) more than doubled their holding in Mahindra Satyam during 2011-12. The total FII holding in the company stood at 20.81 per cent as on March 31, 2012, as against just 8.92 per cent a year ago.

The holding of domestic institutional investors also rose from 3.71 per cent to 7.03 per cent during the fiscal year ended March 31, 2012. The major domestic and foreign investors in the company include LIC, Reliance Mutual Fund, Indus Capital Advisor UK, Goldman Sachs and Abu Dhabi Investments Authority.

The erstwhile Satyam Computer, which became Mahindra Satyam after being acquired by the diversified conglomerate Mahindra group, used to figure among the most favourite Indian IT stocks for the overseas investors ever since its inception.

However, foreign investors dumped their holdings in the company after an accounting fraud broke out in January 2009.

While FIIs held close to 50 per cent stake in the company on an average prior to the scam, their stake came down to as low as 4.5 per cent by June 2009.

However, a successful turaround by its new owners and management seems to have attracted the foreign investors as well in the past few quarters.

While FIIs held 8.92 per cent as on March 31, 2011, it rose to 12.95 per cent by June, 15.21 per cent by September and to 17.13 per cent by December 2011.

As per the latest shareholding pattern of the company, the FII holding has now crossed 20 per cent -- the highest since December 2008, when the FII holding was 44.82 per cent.

The FIIs used to held 30-35 per cent stake in the company during its initial years in 2001-2002, which rose to above 50 per cent by early 2004 and remained over this level for many years. The total foreign holding of the company stood at as high as 73.5 per cent in March 2006.

The FII interest seems to be on a revival path even as the company continues to face damages and claims from some overseas investor groups for the losses suffered by them after disclosure of accounting fraud.

Last month, Mahindra Group also announced the long-awaited merger of Mahindra Satyam with its another technology arm Tech Mahindra in an all-share deal that would create the country's fifth largest software firm with an estimate d annual revenue of about USD 2.4 billion.

The deal, which was cheered by investors of both the companies in the stock market, would involve the shareholders getting two shares of Tech Mahindra for every 17 shares held in Mahindra Satyam.
The merger, to become effective retrospectively from April 2011, would create a single IT entity with an estimated market value of over USD 3.5 billion, revenue of about USD 2.4 billion and a combined workforce of over 75,000 employees.

The merger also marked the completion of a turnaround story of once scam-hit Satyam Computer, which was acquired by Mahindras through a government-run auction way back in April 2009, within months of a major corporate scam came to the light at the company that was known as India's fourth largest IT firm at that time.

In a startling revelation of the country's largest ever corporate fraud, Satyam founder and then Chairman B. Ramalinga Raju had disclosed in January 2009 having overstated the company's profits and falsified its assets.