New Delhi-based IT company Newgen Software has reportedly raised around $20 Mn (INR 127.39 Cr) by selling shares to its institutional investors as part of anchor book allocation. The company is all set to open its $71 Mn (INR 450 Cr) IPO today for a three day period ending on January 18, 2018.
Anchor share allotment is done a day prior to the IPO offering in order to gain confidence in the public offering. The anchor investors are majorly sovereign wealth funds, mutual funds, and pension funds. On the positive note, these investors get a guaranteed allotment, however, they are restricted for a period of 30 days to sell their shares. IPO investors, on the other hand, have the liberty to sell their shares on the listing day only.
The shares are sold to nine institutional investors at a price of $3.85 (INR 245) per share, which is the upper band of the Newgen IPO price range $3.77 – $3.85 (INR 240-INR 245) per share.
The investors who participated in the anchor book allocation included Goldman Sachs India Ltd, HDFC Trustee Co. Ltd, Forefront Alternative Investment Trust, Aditya Birla Sun Life Pvt. Ltd, BNP Paribas Arbitrage and SBI Mutual Fund besides others.
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Through the public offering, Newgen Software is looking to dilute around 25%-26% stake, of which 21% will be from private equity investors. The rest will be sold by the company’s existing employees.
With this IPO, Newgen venture capital investors including IDG Ventures, SAP Ventures and Ascent Capital will also take an exit.
In February 2014, Newgen raised $17.3 Mn (INR 110 Cr) from IDG Ventures and Ascent Capital. Previously, the company had also secured over $7.4 Mn (INR 47 Cr from Headland Capital Partners and SAP Ventures in 2008.
Founded in 1992, Newgen Software is a global provider of Business Process Management (BPM), Enterprise Content Management (ECM), Customer Communication Management (CCM), Document Management System (DMS), Workflow and Process Automation. The firm currently sells its products across 60 countries.
A few of its clients include TCS, HP, HCL etc. The company also has banks, insurance firms, BPOs, healthcare organisations etc. as its clients. In addition to India, Newgen Software has offices in the US, Canada, the United Kingdom, Singapore and Dubai.
As mentioned in the company’s Draft Red Herring Prospectus, it intends to utilised the Net Proceeds of the Offer for purchase and furnishing of office premises near Noida-Greater Noida Expressway. At present, the IT company boasts a workforce of more than 2,200 employees, of which around 238 are working on research and development.
The Newgen IPO will ring the bells in the stock exchange corridors today. Being a company with a history of over 20 years, and majorly positive reviews around the offering, we expect the investors to get a good exit from this offering.
[The development was reported by Livemint.]