BANGALORE, September 8: Multimedia major Pentafour Software and Exports
has been given "in-principle" permission by the finance ministry
to mop up $60 million from the American equity market during the current
financial year.
The finance ministry gave a nod to the equity float of the company
through American depository receipts or global depository receipts last
week.
Pentafour is the third major information technology giant after Infosys
and Satyam to have been given the government clearance to mop up funds
from the overseas market for their expansion programme.
Pentafour's annual general meeting had resolved in June this year to
raise equity through ADR along with the option of hitting the GDR market
during 1999-2000 and the company had subsequently sought permission from
the finance ministry.
With the clearance from the finance ministry, Pentafour can now
approach the Foreign Investment Promotion Board (FIPB) and the US
Securities Exchange Commission (SEC) for clearance.
Finance ministry sources said Pentafour would not have any problem in
floating the equity in American exchanges as it has been following
Generally Accepted Accounting Practices (GAAP) set by the US market
regulator. Company officials said Pentafour would like to list on the
Nasdaq considering the number of high-profile technologies companies being
traded at the bourse.
Pentafour officials said the company planned to spend the proceeds from
the float for overseas acquisitions, mergers and joint ventures during the
current fiscal.
Pentafour had come out with two GDR floats, one in December 1996
offering 3.90 million shares at $13 per receipt and in September 1997
offering 3.53 million shares for a price of $13.16 per GDR.
Promoters hold 16 per cent stake in the software firm, while domestic
financial institutions and mutual funds control 15 per cent stake.
Overseas corporate bodies hold five per cent of the equity. FIIs hold 20
per cent and GDR holding represents another 19 per cent. The Indian public
holds the largest number of shares with 25 per cent.