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Tamal Bandyopadhyay & Anirban Nag
Mumbai, Sept 16: HCL Technologies, promoted by Shiv Nadar and part of the HCL group of companies, is planning to price its initial public offering (IPO) at a premium of around Rs 1,500, merchant bankers associated with the issue told The Financial Express. This will be the largest-ever premium claimed by any domestic company in the primary market.
According to merchant banking sources, HCL Technologies will opt for a 75 per cent book-building route, while the rest will be for public subscription. "The price band (of around Rs 1,500) reflects the inherent strength of the company. The issue will sail through comfortably in a mature and informed market," a leading merchant banker said. Kotak Mahindra and JM Finance are the lead book runners to the issue.
The company is expected to enter the market in October. The draft prospectus was filed with the Sebi on Wednesday. The issue size is likely to be pegged around Rs 700 crore, making it the largest equity float from the infotech sector in the domesticmarket.
HCL Technologies is the holding company for a slew of software companies like HCL America, HCL Australia, HCL New Zealand, HCL Europe, HCL Perrot and HCL James Martin. The company provides a comprehensive range of engineering solutions and value-added services to embedded software and application software product companies as well as to large and medium end-user organisations.
The primary equity market is showing signs of life with a few infotech IPOs set to hit the market over the next few weeks. Kale Consultants leads the pack, and proposes to enter the market on Friday with a Rs 38.25-crore equity issue carrying a premium of Rs 110. The Pune-based software company will be followed by Compucom Software, which will float its IPO on September 20. The size of the issue, which will carry a premium of Rs 65, is pegged at Rs 10.81 crore.
The new generation private-sector bank Centurion Bank is also making an IPO of 33.75 million equity shares of Rs 10 each at par, aggregating Rs 33.75 crore. Theissue will open for public subscription on September 20.
On the same day, VSNL is slated to enter the market with its Rs 75-crore equity float. The share will carry a premium of Rs 740.
The other public issues that are slated to hit the market over the next few weeks include Srikrishna Textiles (rights-cum-equity issue), Zenith Computers, Elder Health Care and Akshay Software. Akshay Software is seeking the Reserve Bank of India's permission to remit the issue proceeds to its subsidiaries abroad. Recently, the Hughes Software issue got the Sebi nod and is expected to open in October.
TimesBank set the trend with a par issue, followed by ICICI's Rs 275-crore issue which was oversubscribed 1.75 times early this week. A few weeks back, the Rs 92-crore Polaris Software IPO was the biggest infotech issue in the country. The issue was oversubscribed more than 20 times.
Sebi has recently relaxed the mandatory public offer requirement of 25 per cent to 10 per cent.
Insight:
No signs ofboom
The fact that a large number of infotech companies are floating IPOs at unprecedented premiums reflects the strong valuations that such stocks command in the secondary market and the retail and institutional appetite for the same. But it is too early to say whether this signals a real revival in the primary market. In Centurion Bank's case, the IPO is a statutory obligation, while there always was primary demand for quality issues like VSNL, which will sail through anyway. More bank issues are also likely, since they have no alternative but to tap the market in order to shore up their Tier-1 capital.
-- Aaron Chaze
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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