VC-backed software development firm Persistent Systems made a successful debut in the bourses listing at a 29% premium at BSE over its issue price of Rs 310/share and hit an intra-day high of Rs 448 before dropping to Rs 417 in early morning trade.
The public issue which was subscribed over 93% was to raise cash for establishing development facilities, and procuring hardware.
The company is backed by a string of VC firms including Norwest Venture Partners, Gabriel Venture Partners, Intel Capital, and Hewlett Packard Company who together own over 20% stake. These investors had infused around Rs 96.8 crore in the firm. None of the investors exited in the IPO, which is surprising as some of them had invested way back in 2000.
Intel and HP invested $1 million in Persistent Systems in April 2000, through Intel 64 Fund – a $250 million venture fund created in 1999 by Intel along with HP and few others. Thereafter the fund was liquidated and shares of the Indian firm were divided among the investors. HP did not invest further in the company but Intel, through Intel Mauritius, again bought shares in PSL in November 2005.
The other two investors – Norwest Venture Partners and Gabriel Venture Partners--invested in PSL in November 2005 by way of cumulative optionally convertible preference shares or CCPS. Norwest paid Rs 63.1 crore while Gabriel paid Rs 22.7 crore for their share. The CCPS were duly converted into equity shares in September 2007. Intel Capital and Hewlett Packard Company have invested Rs 10.3 crore and Rs 0.8 crore respectively in the company.
Established in 1990 by Dr Anand Deshpande, Persistent Systems Ltd provides outsourced software product development services to its clients. It employs over 4,400 people of which 3,500 are software engineers and has centres in Pune, Nagpur, Hyderabad, and Goa.
For the year ended March 2009, PSL clocked revenue of Rs 594 crore and a net profit of Rs 67 crore. The company draws a significant portion (85-90%) of its revenue from the US.