Patni IPO 2nd biggest in software

Anshuman Daga

BANGALORE: Patni Computer Systems' initial public offering (IPO) of up to $95 million in shares, the largest from an Indian software firm in more than four years, has been over-subscribed by about 22 times, the company said on Friday.

The huge over-subscription comes as investors bet on making stellar returns in a Bombay stock market that surged 73 percent in 2003, ranking as Asia's second-best performer after Thailand.

Bidding for Patni's issue of 15 percent of its equity ended late on Thursday. The shares will be priced early next week, but at the top of a Rs200 to Rs230 price band, the Bombay-based firm is valued at up to Rs2870 crore ($634 million).

The IPO from India's No. 6 software services exporter comes after recently listed shares of media firm TV Today Network Ltd and energy firm Indraprastha Gas Ltd doubled on their debuts. Both were over-subscribed by about 35 times.

Patni arrives ahead of a mega issue by sector-leader Tata Consultancy Services, which has been anticipated for two years.

Local capital markets monitor Prime Database said Patni was the second-biggest software issue since HCL Technologies, India's fifth largest software firm, pulled off a $182 million IPO in November 1999, near the peak of the dot-com boom.

Patni is selling 13.4 million shares, while 5.32 million more are being sold from founders and other shareholders including investment units of General Electric Co. The shares sold make up around 15 percent of its fully diluted enlarged capital.

Prime Database says up to $13 billion of equity issues are expected this year, up sharply from $1.5 billion raised over the past four years, as firms ride a stock market boom and 30-year-low interest rates lure risk-averse investors to equity.

IPO MARKET HEATS UP

"People have made huge money from previous IPOs and the success of Patni's issue shows that investors have the potential to put money in quality offerings," said Sanjeev Khandelwal, director at New Delhi-based Prime Database.

Among the main issues expected are those from large state-run companies such as energy exploration firm Oil and Natural Gas Corporation and Gas Authority of India Ltd, with the government selling a 10 percent stake in each.

Patni, which counts financial, insurance and manufacturing firms among its key clients, is nearly 10 percent-owned by GE and relies on the U.S. conglomerate for about 45 percent of revenue.

The holding of Patni's founders is expected to decline to 51.3 percent from 60.8 percent after the public issue.

Other investors such as GE and U.S. private equity firm General Atlantic Partners, which invested $100 million in Patni, will see their stake fall to 33.7 percent from 39.2 percent.

Founded more than two decades ago by Chairman Narendra Kumar Patni, the firm is one of India's software industry pioneers. It reported revenue of $188 million in 2002, after growing at a compound annual rate of 36 percent over the past three years.

© Reuters