Hughes, HCL plan mega IPOs

"We are expecting a clearance from SEBI in a day or two for our public issue of shares," Arun Kumar, president and managing director of Hughes Software told PTI here today. The price of the shares will be decided through book-building process, he said adding that the company would issue 43.75 lakh shares through the offer.

Kumar declined tocomment on the amount to be mobilised through the issue, but investment bankers associated with the issue put the size at around Rs 300-400 crore. The US-based parent Hughes Network Systems will offload 26 per cent stake through the public issue, which will be open for subscription for four days.

HCL Technologies is opting for a 75 per cent book-building route and the balance on a subscription basis to the public, said market sources. HCL Technologies belongs to the Delhi-based HCL group of companies promoted by Shiv Nadar. According to a HCL Technologies communique, "the company has been considering various options for its IPO, but the final decision has still not been taken. Any announcement regarding the company’s initial public offering will be made at the appropriate time once the decision is finalised and the formalities are completed." However, according to market sources, HCL Technologies has already finalised the draft offer document and is likely to file the same with the SEBI during the nextfortnight.

HCL Technologies is the holding company for a gamut of software companies operating all over the world. These companies include HCL America, HCL Australia, HCL New Zealand, HCL Europe, HCL Perrot and HCL James Martin. The company provides a comprehensive range of engineering solutions and value-added IT services to embedded software and application software product companies as well as to large and medium end-user organisations.

Hughes entered India in 1992 through a joint venture with Escorts with the US company holding 51 per cent. The US parent later bought back the 49 per cent held by the Indian partner to make it a 100 per cent subsidiary. Subsequently 24 per cent was sold to venture capital funds.

Kumar said the company would fund acquisitions in India through the proceeds of the issue and the excess money would be utilised for entering into E-commerce and meeting the company’s export bill. Kumar said after the public issue, the promoters’ stake would come down to 56.33 per cent. Totarget the high net-worth overseas investors, the company was also planning to conduct roadshows in the US, Europe and Asia, he said.

During recent times, the Rs 92-crore Polaris Software IPO was the biggest infotech issue in the country. The issue received a tremendous response from the public and was oversubscribed more than 20 times. Even smaller issues received tremendous response from investors and every software issue that hit the market in the last one year has been oversubscribed at least two times the initial offer amount.

Merchant bankers expect a series of large IT issues in the current year. This follows the relaxation in the IPO norm announced by the market regulator last month. SEBI had relaxed the mandatory public offer requirement of 25 per cent to 10 per cent. This had been done with the objective of preventing IT giants from listing abroad. Infotech companies have to list on the exchanges in order to retain talent by offering employees stock option.