More on SIFY, India's First Net IPO Imminent
By Uday Lal Pai
India Correspondent, asia.internet.com
[October 19, 1999--MUMBAI] The listing of private ISP Satyam Infoway's American Depository Shares
(ADS) on NASDAQ is scheduled for this week. Satyam has chosen the symbol 'Sify' for trading.
The initial public offer (IPO) of up to 4.8 million ADS within the price band between $12 and $14 is
estimated to mop up $50 million. Another 625,000 shares have been set apart for the underwriters in case of
over-allotment.
As per document F1/A files with the US Securities and Exchange Commission (SEC), the company plans to
issue 2.5 million ADS to US investors and another 1.67 million to other international investors. The
company is holding road-shows for the proposed IPO.
The net proceeds received from the proposed offering are planned to be deployed to fund network
infrastructure expansion and enhancements, develop content for Satyam Infoway's Internet portal business,
advertise and promote the Satyam brand, and to repay some debts.
The net proceeds from Satyam after deducting underwriting discounts and the offering expenses, are
estimated at $49.5 million. This would rise to $57 million if the underwriter's over allotment option were
fully exercised.
US-based Internet technology company Sterling Commerce and South Asia Regional Fund (promoted by
Commonwealth Development Corporation) also hold equity in Satyam, the second-largest ISP in India.
Satyam has placed 481,000 equity shares with Sterling for $5 million. The transaction was completed in last
month. In October 1998, Satyam sold 3 million equity shares to SARF for 4.8 million.
"The fund from the private financing were used primarily to develop our consumer Internet access business,
expand our network and develop our on-line content business" says its prospectus filed with SEC. Satyam, a
subsidiary of Hyderabad-based Satyam Computer Services Ltd., has used the funds for general corporate
purposes, primarily the repayment of its debt.
According to the prospectus, Satyam recorded more than 77,000 subscribers for its services as of August
1999. It has more than 300 corporate customers for its private network services. Satyam is operating India's
largest private data network utilizing Internet Protocol (IP) with points-of-presence in 25 metros in the
country.
Satyam sources say, Internet users in India will grow at an average rate of 76 per cent annually to 4.5 million
in 2002."We believe, our company is well positioned to take advantage of this significant market
opportunity." claims the source, while warning that the market in India is currently in the early stages of
development and involves "significant risks".
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