Fraud-hit Satyam Computer Services won regulatory approval to sell a majority stake in itself, but potential suitors said there was still uncertainty about the Indian company's accounts and liabilities.

Satyam's government-appointed board wants to bring in an investor to restore confidence among its roughly 50,000-strong staff and more than 600 customers, which include General Electric and Qantas Airways .

Satyam shares closed up 19.9 percent at the day's high of 42.10 rupees on Friday, boosting the company's market value to about $550 million, still just a fraction of the $7 billion it was worth last May.

The stock was the most actively traded on the Bombay Stock Exchange, with almost 25 million shares changing hands.

The company has been struggling for survival since founder and Chairman Ramalinga Raju shocked investors in January, saying Satyam's profits had been overstated for years and assets falsified in what has become India's biggest corporate scandal.

Raju, the managing director and the chief financial offer quit and were later arrested.

A fraud of this magnitude will make any buyer wary about the fair value of the company, said Kevin Trindade, IT analyst at KR Choksey Shares and Securities.

The board should ensure that there is enough clarity and transparency about the company's business in order to find a buyer who will add value to the company.

New York-listed Satyam said in a statement on Friday it expected to soon invite expressions of interest from qualified investors under a global bidding process after its plans were approved by the market regulator.

TWO-PHASE SALE

As part of a two-phase sale process of Satyam, the chosen investor would acquire newly issued equity shares representing 31 percent of Satyam's share capital and then make a public offer to buy a minimum of 20 percent more, as required by Indian law.

If the investor fails to acquire 51 percent even after the close of the open offer, it would be able to subscribe to additional equity shares, Satyam said.

Bidders need to have more than $150 million in net assets. The successful bidder will not be able to sell any shares for three years from the date of the acquisition.

Goldman Sachs and Indian investment bank Avendus Advisors are advising Satyam's board on the sale process.

Analysts said bidders were attracted by Satyam's strong client base and its large workforce but setting a bidding price would be difficult without any audited accounts and clarity about its liabilities.

The company faces a number of class action lawsuits in the United States.

CAUTIOUS SUITORS

India's top engineering firm Larsen & Toubro , which controls about 12 percent of Satyam, and diversified firms Spice Group and Hinduja Group have expressed an interest in Satyam but said they had not decided whether to bid.

Now in this case we have no clue what is the enterprise value and what is the equity value, Hinduja Group's Chief Financial Officer Prabal Banerjee told Reuters. So, how can you do a valuation? That's a real issue not for me alone but for every bidder.

Satyam Chairman Kiran Karnik has said the restatement of accounts would take time. The board appointed KPMG and Deloitte in January to restate Satyam accounts.

We will have to wait for the information document ... whether this is just an enabling approval, whether there will be any modification, Larsen and Toubro Chief Financial Officer Y.M. Deosthalee told Reuters.

Spice Group Chairman B.K. Modi said he would bid if the process was transparent and did not favor existing shareholders.

What you require is a proper board and a shareholder who is able to commit money inside the company, Modi told television channel CNBC-TV18.

(Additional reporting by Devidutta Tripathy in New Delhi and Ami Shah in Mumbai; Editing by John Mair and Jon Loades-Carter)

Mahindra Satyam General electric India