Newgen Software IPO nears two-thirds mark on second day

By Ankit Doshi

  • 17 Jan 2018
Newgen Software IPO nears two-thirds mark on second day
Credit: Shah Junaid/VCCircle

The initial public offering of New Delhi-based IT firm Newgen Software Technologies Ltd reached near the two-thirds mark on the second day of the issue on Wednesday as retail investors continued to bid.

The issue of 12.21 million shares, excluding anchor allotment, received bids for 7.89 million shares, stock-exchange data showed.

The quota of shares reserved for qualified institutional buyers was subscribed about 10%. The retail portion, in which bids cannot exceed Rs 2 lakh, was subscribed 1.22 times. The portion set aside for non-institutional investors, comprising corporate bodies and wealthy individuals, saw just 3% bids.

The IPO was subscribed 19% on Tuesday.

On Monday, the IT firm raised Rs 127.38 crore ($20 million) by selling 5.19 million shares to a bunch of anchor investors including Goldman Sachs and hedge fund Forefront Alternative Investment Trust at the upper end of the Rs 240-245 per share price band.

Newgen is seeking a valuation of Rs 1,696.27 crore ($266.08 million) through the IPO, which closes on Thursday.

At the upper end of the price band, the company will issue 3.87 million fresh shares while its founders and investors will sell 13.45 million shares. The investors include Ascent Capital, IDG Ventures and SAP Ventures.

The total IPO size is about Rs 425 crore ($66.66 million) and will result in 25.03% stake dilution on a post-issue basis.

The company had filed its draft prospectus with the Securities and Exchange Board of India on 27 September. It received the regulator’s nod on 17 November.

Newgen will use the proceeds from the fresh issue to buy and furnish office premises in Noida. It will use the balance amount for general corporate purposes.

ICICI Securities, Jefferies India and IDFC Bank are managing Newgen’s IPO.

Newgen offers a software platform that enables customers to develop applications for their businesses. The platform comprises enterprise content management tools that help digitise content and information, business process management and customer communication.

It earns revenue from multiple streams such as the sale of software products. It also earns annuity-based revenue such as software-as-a-service subscription fees, and annual technical and annual maintenance charges. The company had about 450 customers in almost 60 countries as of 30 June 2017.

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