The IPO comprises a fresh issue of shares worth Rs95 crore and an offer for sale of 13.45 million shares by existing venture capital investors.
Mumbai: Newgen Software Technologies Ltd, a software products company, on Tuesday said it will launch an initial public offering (IPO) on 16 January, seeking to raise over Rs400 crore.
Newgen offers platforms that enable organizations to drive digital transformation of business processes such as automation of routine business functions, making them faster, easier and more accurate and increasing the channels or devices through which these functions can be performed.
The company has priced its shares in a price band of Rs240-245 per share. The offering closes on 18 January. The offering comprises a fresh issue of shares worth Rs95 crore and an offer for sale of 13.45 million shares by existing venture capital investors.
Newgen will utilize the proceeds from the IPO for furnishing its office premises in Noida, on the outskirts of New Delhi.
Venture capital investors selling their stakes include IDG Ventures, Ascent Capital and SAP Ventures. Ascent Capital is selling almost its entire 11.42% stake in Newgen, while IDG and SAP Ventures are selling 4.57% and 3.31%, respectively. Like Ascent, both IDG and SAP Ventures are exiting the company. SAP Ventures invested in the company in 2008, and Ascent and IDG in 2014.
At the upper end of the price band, the share sale will collectively fetch the company and the exiting investors around Rs424.6 crore.
Investment banks ICICI Securities Ltd, Jefferies India Pvt Ltd and IDFC Bank Ltd Ltd are managing the Newgen share sale. Newgen is currently serving 450 clients across 60 countries across five key segments—banking, government, insurance, healthcare and business process outsourcing.
“The three spaces of the technology market that we operate in - ECM (enterprise content management), BPM (business process management) and CCM (customer communication management) are all growing globally at a rate of 7%-10%, while the rest of the technology space is growing at a much slower rate. Within India these three areas are expected to grow at more than double of the global growth expectation and 40% of our business comes from India,” said Virender Jeet, senior vice-president at Newgen. The company is making investments in the US which will help it get a bigger share of the US market, the biggest globally for ECM, BPM and CCM, Jeet added.
The US currently contributes 26% of the company’s revenue, while other geographies such as Middle East and the Asia-Pacific contribute 27% and 7%, respectively. In fiscal 2017, Newgen reported revenue of Rs389.7 crore, up from Rs315.4 crore in the previous financial year. The company reported a profit of Rs50.1 crore in fiscal 2017, up from Rs26.7 crore in the previous year. The company has seen its revenue grow at a compound annual growth rate of 21% over the last five financial years.
“We will look to grow the company through various routes such as increasing the geographical footprint, adding more verticals beyond the core five verticals that we currently serve and also by going deeper into existing verticals by offering new products to our clients,” said Jeet.
Newgen’s IPO will be the second initial share sale this year. Apollo Micro Systems Ltd, a Hyderabad-based company catering to the defence sector, is launching a Rs156 crore IPO on 10 January.