Hughes plans to raise Rs 300 cr through book building
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Mollica Senapati
MUMBAI 9 JULY
HUGHES Software Systems is exploring the possibility of raising Rs 300 crore in equity funds from the public through the bookbuilding process. If this materialises, it would be the first public issue of equity through the bookbuilding process in the country.
Earlier, Nirma had planned an equity issue through the book-building route which was later aborted mid-way due to ‘bad' pricing. Hughes Software Systems is a communications software company which offers software services, products and solutions. It is a 100 per cent subsidiary of Hughes Network Systems.
Market sources say that bookbuilding of the Hughes Software issue could be approached in two ways — either by indicating a ‘price band' or through ‘price discovery'.
If a price band is adopted, investors can bid for any number of shares within the band, while if price discovery is used, investors will have to indicate both the volume and price at which he/she is willing to pick up the shares.
“This will finally depend on the marketing strategy. However, while going to Securities and Exchange Board of India (Sebi), it is not necessary to go with a band. So whether Hughes Software goes for a band or opts for a price discovery can be decided later,” market sources said.
Both forms of equity pricing are acceptable in the international markets. Company officials when contacted refused to either confirm or deny this.
Sources also said that though the target would be around Rs 300 crore, the exact size of the offer will vary with the final pricing of the issue.
“The size is a function of the price. Hughes Software has to offload 25 per cent of its equity as that is the minimum that is required for listing,” they said.
Sources said that the prospectus has not yet been filed with Sebi and final details were being worked out. The merchant bankers are in the process of ironing out certain kinks in Sebi guidelines on bookbuilding, they said. The proceeds from the issue will be used for funding expansions and mergers and acquisitions (M&As).
Market sources say that the IPO market is expected to witness a flurry of activity. In fact, a number of proposals from software and pharma companies have already been pouring in. This is because most companies have been leveraging on their balance sheets for the last two years and equity expansion has become necessary.
The market for equity issues is expected to look up with bullishness returning to the stock markets, sources said. While information technology stocks are doing well, telecom software companies are also expected to cash in on the run. |
