Datamatics may go public

MUMBAI, MAY 6: Datamatics Limited, one of the largest privately held software companies in India after Tata Consultancy Services, has sai...

MUMBAI, MAY 6: Datamatics Limited, one of the largest privately held software companies in India after Tata Consultancy Services, has said it is open to the idea of going public. The timing of the issue would hinge on two major acquisitions which it plans to complete by the end of the current financial year, Rahul Kanodia, joint managing director of the group, told The Indian Express.

quot;We have been looking at it8230; going public. We will probably do it after the acquisitions,quot; he said. The company is planning to raise 200 million to 300 million eventually to fund its expansion plans.

The Rs 200-crore company has already identified three US-based software development companies at least two of which it intends to acquire and is currently in the process of negotiating with them.

quot;We don8217;t have any immediate need for funds. This may be the right time to go for a listing but servicing capital is also expensive,quot; said Kanodia. A number of investment bankers including DSP Merrill Lynch haveapproached it for discussions. However, the software firm is yet to decide on whether to list on a domestic stock exchange or the Nasdaq. Datamatics has fully-owned subsidiaries in the US, Japan and Germany.

Under existing SEBI guidelines, at least 25 per cent stake will have to be offered to the public during the primary issue. The company is keen on offering less than 20 per cent to the public during the initial public offering and increasing the stake only during a secondary issue. quot;You cannot arrive at the correct pricing right away. Companies here take great pride in saying their issue was oversubscribed. It only means the issue could have been priced higher,quot; said Kanodia.

The company has earmarked Rs 100 crore for acquisitions both in India and abroad. Rather than a one-time lumpsum payment, Datamatics intends to arrive at an arrangement where the original promoters will continue with the merged entity. They will receive an upfront payment and earn percentage of the revenues as part of the mergedentity. The US companies will be acquired by Datamatics Limited and transferred to its US subsidiary after obtaining Reserve Bank of India approval.

The consolidated turnover of the flagship company Datamatics Limited, Datamatics Technologies, Datamatics Financial Services and Datamatics Staffing Services was Rs 98.6 crore in 1997-98 and it was ranked seventh in top ten Indian software companies list by Computers Today.