Pune-based mid-sized IT company Nihilent Technologies Ltd has filed its draft red herring prospectus (DRHP) with the capital markets regulator Securities and Exchange Board of India for its initial public offering (IPO).
The firm, which offers consulting and IT outsourcing services, is looking to raise Rs 140 crore (about $21 million) through a fresh issue besides an offer for sale that will see its existing Indian promoters selling part of their stake.
This comes across as an interesting and rare case of a firm majority owned by international firms going public in India.
Nihilent is 69.16 per cent owned by Hatch Investments (Mauritius) Ltd. Hatch is an investment holding company jointly controlled by NTT-owned firm Dimension Data Protocol BV and South Africa's Adcorp Professional Services Ltd.
Hatch was previously part of Nedbank Africa Investment Ltd, which had originally backed Nihilent with Rs 30 crore in funding.
Here's a snapshot of the IPO:
- The IPO comprises a fresh issue of shares to raise up to Rs 140 crore (about $21 million) and an offer for sale of up to 2.43 million equity shares by Indian promoters.
- Bankers: Motilal Oswal Investment Advisors.
Objects of the issue
Of the net proceeds, the company plans to use around Rs 48.88 crore toward potential acquisitions and strategic initiatives; Rs 22 crore for debt repayment; Rs 20.4 crore to purchase IT software, hardware and network equipment for a development centre in Pune and to upgrade its corporate office; Rs 6 crore for developing new software platforms and the remaining for other corporate purposes.
Nihilent had recently acquired a 51 per cent stake in Intellect Bizware Services. It said in the DRHP that it would also use these net proceeds to acquire the balance 49 per cent stake in Intellect.
"Any such failure to acquire the remaining stake of Intellect may adversely affect our results of operations and financial condition," it added.
- Incorporated in May 2000, Nihilent's service offerings include enterprise transformation and change management, digital transformation services and enterprise IT solutions.
- It is majority owned by DD Protocol and Adcorp with founder and CEO LC Singh and family owning around 16 per cent stake, which has put up for sale.
- It caters to clients in sector including banking, finance and insurance, media and entertainment, mobility and telecommunications, life sciences and healthcare, manufacturing, retail and consumer products.
- As of November 30, 2015, it had more than 1,500 employees across 18 offices located in India, South Africa, Nigeria, Tanzania, the US, the UK, Ireland and Australia.
- The company draws much of its revenue from South Africa, given the base of its key backer. As part of its global strategy, the company is expanding its operations in other countries such as the US, the UK, Australia, Ireland, India, Nigeria and Tanzania.
For the year ended March 31, 2015, the company's consolidated revenue from operations was Rs 292 crore against Rs 245 crore and Rs 200 crore, respectively, in the previous two fiscals. In the same period, its net profit declined to Rs 37.36 crore from Rs 43.65 crore in FY14 and Rs 39.1 crore the year before.