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vSpring Capital-Backed Fatpipe To Raise $10M In IPO

07 June, 2010

Early stage venture capital firm vSpring Capital-backed IT firm FatPipe Networks is looking to raise Rs 49 crore (a little over $10 million) through a public issue. It will use the funds to expand the product line, establish new marketing offices globally, strategic acquisition, meet margin money for working capital requirement besides other expenses.

The Chennai-based firm is into technology for WAN optimisation, security and bandwidth management. The promoters had merged operations of another group firm Ragula Systems Development Company that was based in Utah (US) two years ago. Ragula was, in turn, backed by a string of VC firms who now have a significant exposure in FatPipe.

Ragula had first raised $1 million in Series A funding from Draper & Associates, Wasatch Ventures and UTFC in 1996. It then went for preferred B Series financing to raise $8.1 million from VC firms and individual investors in April 2001 and approached vSpring for Series C finance in October 2002.

The key financial investors in FatPipe include vSpring (22.12%), Wasatch Ventures (8.85%), Draper & Associates (3.99%) among others. In total, corporate bodies own over 44% in the company and individual shareholders have 18% stake. Promoters Ragula Bhaskar and Sanchaita Datta own around 37% in FatPipe.

For the nine months ended December’09, FatPipe had total income of Rs 45.91 crore with net profit of Rs 5.2 crore.


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1 Comment
S. Smith . 6 years ago

Run from this offering:

* The Company operates in a highly competitive environment.

* The majority of the operations of the Company are carried out from its branch offices in the USA.

* Risks related to FEMA.

* The funds requirements are not appraised by any Bank or Financial Institution.

* The Company proposes to acquire businesses/companies located outside India, the company is yet to identify companies/ businesses to be taken over.

* The Company has not yet tied-up for debt component for enhanced working capital needs.

* The Company has not paid dividend in the past.

* The global operations expose the Company to complex management.

* The combined employee strength is 120 and 50% are in sales and marketing.

* The average cost of acquisition of Equity Shares by the Promoters is at Rs 10/-

* Receivables out standing as on 30-09-09 are at Rs1269.69 lacs, against a turnover of Rs 2958.68 for the same period.

VALUATION

EPS for the year FY 10-11 is expected to be Rs. 5.50 per share. At the lower end of the price band of 82, PE multiple works out to 15 times. Similar companies in IT networking equipments / manufacturing are presently ruling at PE of around 8 times. Valuation is very much stressed . There are no project to be implemented. Structured IPO. The company has no dividend payment history. Keep 1000 km distance from the issue.

vSpring Capital-Backed Fatpipe To Raise $10M In IPO

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