Indian IPO

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Tuesday, August 29, 2006

HOV Services IPO opens Sept 4, price band at Rs 200-240

HOV Services, providing business process outsourcing, BPO services to the finance and accounting, F&A business sector with operations in India and the US, proposes to enter the capital market on September 4, 2006 with an initial public offering, IPO of 4,050,000 equity shares of Rs 10 each in the price band of Rs 200 to Rs 240 per equity share, as per press release.

The issue closes on September 7, 2006 and constitutes 32.3% of the fully diluted post Issue paid up capital of the company.

The issue is being made through the 100% book building process where at least 50% of the issue shall be allocated on a proportionate basis to qualified institutional buyers, QIBs. 5% of QIB portion shall be available for allocation to mutual funds only and the remaining QIB portion shall be available for allocation to QIB bidders including mutual funds, subject to valid bids being received at or above the issue price.

Further, upto 15% of the Issue shall be available for allocation on a proportionate basis to non-institutional bidders and upto 35% of the issue shall be available for allocation on a proportionate basis to retail individual bidders, subject to valid bids being received at or above the issue price.

The equity shares are proposed to be listed on the NSE and the BSE.

The company intends to deploy the net proceeds of the issue to part finance its plans of capital expenditure and acquisitions. In addition, it also proposes to infuse funds into its subsidiary, HOV Services, LLC for repayment of Class B Units issued as consideration for acquisition of subsidiaries as well as redemption of Class B units issued by the subsidiary.

DSP Merrill Lynch is the BRLM, JM Morgan Stanley Private Limited is the Co-BRLM for the Issue and Karvy Computershare Private Limited is the registrar.

Currently, the company has a total of 410 seats located in Pune and the US. It intends to set up and fill the 750 seats in the new facilities by March 31, 2007 in 3 phases to meet its planned business requirements. The company has in the past grown its business and operations through both organic and inorganic routes. Going forward, it believes that strategic investment and acquisitions may continue to act as an enabler to growing its business.

The company has positioned itself in the F&A community by providing practical solutions to core-level business management functions. By developing core competencies to serve the needs of FORTUNE 500 companies and deploying unique skill set via a global service base, it provides a unified strategy to meet any basic business financial requirement

The company has achieved improved financial performances over the past several years. Based on the proforma combined summarized income statement, its revenue has grown from Rs 947.9 million in the fiscal year ended March 31, 2003 to Rs 1,638.4 million in the fiscal year ended March 31, 2006. Its profits before interest, depreciation and taxation has also grown from Rs 20.6 million in the fiscal year ended March 31, 2003 to Rs 210.0 million in the fiscal year ended March 31, 2006.

The Indian BPO industry has developed a reputation for being a cost effective provider of quality service and processes. NASSCOM has projected the size of the BPO industry in 2010 to be approximately USD 25 billion.

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