After Infy, here comes Sify.
Satyam plans 4.8 million ADS at $12-14 each
(Monday, October 11, 1999)
Pradipta Bagchi in Mumbai -Business Standard
After Infy, here comes Sify. Satyam Infoway, India's second largest internet services provider, has chosen the symbol "SIFY" for its forthcoming initial public offering of up to 4.8 million shares as American Depository Shares (ADS) on the Nasdaq at a price between $12 and $14.
As per document F1/A files with the US Securities and Exchange commission, the company plans to issue 2.5 million ADS to US investors and another 1.67 million to other non US international investors. In addition, the company has also set aside another 625,000 shares for its underwriters in case of over allotment.
The net proceeds from Satyam Infoway's IPO, after deducting underwriting discounts and the estimated offering expenses are estimated to be approximately $49.5 million, or $57.0 million if the underwriters' overallotment option is exercised in full. This sum assumes an initial public offering price of $13.00 per ADS.
In its filings with SEC, the company has indicated to prospective investors that it will vest the $50 million to be raised in the following manner. Approximately $25 million will be used to fund network infrastructure expansion and enhancements. Another approximately $10 million will be used to develop content for the company's Internet portal business. Besides, approximately $5 million will be used to advertise and promote the Satyam Infoway brand.
The remaining $10 million could be used for a wide range of purposes including possible strategic investments, partnerships and acquisitions. "While we have from time to time preliminarily discussed potential investments, strategic partnerships and acquisitions in the ordinary course of our business, we have no current agreements or understandings relating to any such transaction," the company stated in its filings.
However, when presenting its business outlook, the company says: "We believe that our growth can be supplemented by selective acquisitions of complementary businesses, particularly Internet service providers that have developed local or regional points of presence and that have a significant or growing subscriber base in our current or targeted markets."
The company further says: "In addition, we may seek to expand our market presence in our corporate network business through the acquisition of web hosting, data center, web implementation and/or systems integration companies. We may also consider opportunities to acquire third-party websites and sources of additional on-line content and technology for our Internet portal and proprietary website businesses."
The company has mandated Merill Lynch and Saloman Smith Barney as the lead managers and underwriters to the issue.
Satyam Computer Services will beneficially own approximately 59.2% of equity shares of Satyam Infoway following the ADS offering or 57.5% if the overallotment option is exercised in full.
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