Hughes Software plans mega IPO

MUMBAI, SEPT 20: Hughes Software Systems Ltd HSS, a company promoted by Hughes Electronics of USA, is entering the capital market with ...

MUMBAI, SEPT 20: Hughes Software Systems Ltd HSS, a company promoted by Hughes Electronics of USA, is entering the capital market with a mega initial public offering of 43,75,000 equity shares to raise around Rs 300-350 crore. Ninety per cent of the offer will be made through the book-building route and 10 per cent by fixed price process.

The price for the fixed portion will be determined at the closure of the book building process. The expected price band is the range of Rs 418 to Rs 630 per share, Pradman Kaul, HSS chairman said at a press conference on Monday. The bid will open for the book building process on September 22 and close on September 28. The final pricing will be decided the next day.

This will be the first equity issue to be done through the book-building route. The price band was arrived at after interactions with FIIs and domestic institutions, Uday Kotak of Kotak Mahindra Capital Company, lead manager, said.

Of the total shares on offer, 8,75,000 shares or 5 per cent represent new equity, while 35,00,000 shares is an offer for sale by the promoters. Post-issue the promoters8217; Hughes Electronics and group companies holding in the compnay will come down from 76.19 per cent to 56.14 per cent.

The company had a revenue of Rs 87.27 crore and net profit of Rs 22.40 crore in the last fiscal. For the current fiscal, it has forecast a total income of Rs 105.40 crore and a net profit of Rs 26.20 crore.

The focus area of the company is communication software. It has dedicated software development facilities at Gurgaon near Delhi and Bangalore. The market for communication software is estimated to grow at a compounded annual growth rate of 13.5 per cent 8212; from the existing 15.5 billion to 80 billion in 2010.

The company was established to primarily cater to the software needs of Hughes Network Systems HNS which remains its largest customer today. However, HSS plans to reduce its dependency on HNS from 88 per cent to 56 per cent in the current fiscal. Its other customers are mostly from United States and Western Europe.

Story continues below this ad

The aim of the issue is to fund acquisitions and its ongoing capital expenditure. Roadshows for the issue have been kicked off at Mumbai and New York simultaneously.