From Indian newspaper:
Satyam Infoway ups ADR price to $18; listing
today
Partha Pratim Sinha & S Muralidhar
Mumbai, Oct 18: Satyam Infoway has hiked the price band for its ADR offering to
a maximum of $18 per American Depository Receipts (ADR) ahead of its listing on
the Nasdaq on Tuesday. In its latest offer document filed with the SEC, the
company has stated that it anticipates the price to public would be between `$16
and $18 per ADR. The estimated size of the issue proceeds would be around $86
million assuming a price of $18 per ADR. The proposed Nasdaq symbol will be
`Sify'.
Market players attribute the upward revision in the price band from $12-14 to
$16-18 to the overwhelming response to the offering from investors. The size of the
book is believed to be around $1.8 billion against the offer of around $57 million.
This was mirrored in the surge in the prices of Satyam Computers to Rs 1,625 on
the BSE with market players speculating the possibility of Satyam Infoway's ADRs
commanding a price of $30-35 on listing on Nasdaq.
Satyam Infoway will be the second Indian company after Infosys Technologies to
list its ADRs on the Nasdaq. On the other hand, market players attribute the fall in
the Infosys ADRs to the expectations being built around Satyam. ``Some investors,
obviously, see a much faster appreciation in Satyam and hence the melting down of
Infy ADRs,' says a fund manager.
The Infosys ADRs dipped by $6 to $147 during the opening session of trading on
the Nasdaq on Monday. Infosys has been falling steadily from a high of $174 over
the last 10 days.
Earlier, Satyam Infoway had estimated a retention of $57 million from the ADR
proceeds. The funds will be used for network infrastructure expansion, develop
content for its Internet portal business, to advertise and promote the brand and for
general corporate business. The company is also looking at possible strategic
investments, partnerships and acquisitions.
Satyam plans to set aside about $40 million for expansion and brand promotion,
while the balance is likely to be used for general business and acquisitions/strategic
investments.
Satyam has disclosed in its ADR document that it has the flexibility of deploying the
proceeds temporarily in top rated debt instruments.
Of the total 4.2 million ADRs, 2.5 million ADRs will be offered to US investors and
the balance to international investors. Merrill Lynch and Salomon Smith Barney are
the underwriters to the offering. Satyam had already made a private placement to
Sterling Commerce at $ 10.40 per ADR.
Satyam Infoway is the second largest provider of Internet access and services to
consumers and businesses in India, based on number of customers as of August 31,
1999. It provides private network services, business-to-business electronic
commerce solutions and website development and hosting services to businesses in
India. The company also operates an on-line portal and other on-line services.
Satyam, which began its services in April 1998, has over 300 corporate customers.
As of August 31, 1999, the company had more than 77,000 subscribers for
consumer Internet access service. |
