India's Hughes Software Applies for 4.4 Mln Share IPO (Update1)
hssworld.com
Bloomberg News
August 5, 1999, 6:38 a.m. PT
India's Hughes Software Applies for 4.4 Mln Share IPO (Update1)
(Adds more details.)
Mumbai, Aug. 5 (Bloomberg) -- Hughes Software Systems Ltd., an Indian software company, has sought the approval of India's stock market regulator for an initial public offer of 4.4 million shares.
The company -- which is 76 percent owned by a unit of the U.S.-based Hughes Electronics -- plans to use the money to expand and acquire other companies, according to the offer document submitted to the Securities and Exchange Board of India or Sebi, the regulator.
''We have filed our prospectus with Sebi yesterday and are awaiting their approval,'' said a Hughes spokesman, who did not wish to be identified.
If Hughes Software goes ahead with the IPO, it will be the fourth software IPO in the last one year as companies tap into the seemingly insatiable demand in the country for stocks of software companies. India's software shares have been among the best performing in Asia as the prices of more than ten software stocks have already more than doubled this year.
While Hughes Software wouldn't say how much it hopes to raise through the initial share sale, analysts said the company could raise as much as 2.2 billion rupees ($51 million). That would make it the biggest ever initial public offer by a software company in India.
The shares will be popular with investors like other software favorites, such as Infosys Technologies Ltd. and Digital Equipment Ltd., analysts said.
The shares of Sontata Software Ltd., an Indian software company that listed in Jan., are now trading at more than five times their initial sale price. Sonata shares fell 6 percent to 452.40 rupees today.
''Hughes is considered very highly since it has diverse clients and expertise, so it should get a good discounting,''
said Aniruddha Dange, an analyst with ABN Amro. ''The company will get discounting in line with highly rated companies, such as Infosys Technologies Ltd. and Digital Equipment,'' he added.
Telecom Software
Hughes Software, which specializes in software for phone companies, had sales of 873 million rupees ($20 million) and profit of 224 million rupees for the 15-month period ended March 31, 1999.
Hughes Network Systems -- an Indian arm of California-based Hughes Electronics that's the largest U.S. satellite maker -- owns a controlling stake in Hughes Software.
Hughes Network Systems is also Hughes Software's biggest customer, and accounts for close to three-fourths of its business.
''They should be able to sell shares for between 500 to 520 rupees,'' said Bhadresh Modi, fund manager at GIC Mutual Fund who helps manage 10 billion rupees of money.
The offer includes 437,500 shares at a fixed price and about 3.9 million shares whose price will be determined from bids by investors, the draft prospectus said.
Kotak Mahindra Capital Co. has been named to lead manage the issue.
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