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Satyam Infoway Brings India's First Net IPO on Nasdaq

Private ISP Satyam Infoway Tuesday became the first India-based pure Internet company to list on the Nasdaq.

The initial public offering (IPO) of 4.175 million American Depository Shares (ADS) was set at a price of $18 this morning, well above the $12 to $14 range set yesterday. The stock hit a day high of 47 1-1/16.

Proceeds from the IPO were estimated at $49.5 million, after underwriter payments and other costs were deducted from the gross figure of $75 million.

As per document F1/A files with the US Securities and Exchange Commission (SEC), the company issued 2.5 million ADS to US investors and another 1.67 million to other international investors.

The net proceeds received from the proposed offering are planned to be deployed to fund network infrastructure expansion and enhancements, develop content for Satyam Infoway's (SIFY) Internet portal business, advertise and promote the Satyam brand, and to repay debt.

US-based Internet technology company Sterling Commerce and South Asia Regional Fund (promoted by Commonwealth Development Corporation) also hold equity in Satyam, the second-largest ISP in India. Satyam has placed 481,000 equity shares with Sterling for $5 million. The transaction was completed in last month. In October 1998, Satyam sold 3 million equity shares to SARF for 4.8 million.

"The fund from the private financing were used primarily to develop our consumer Internet access business, expand our network and develop our online content business," says its prospectus filed with SEC. Satyam, a subsidiary of Hyderabad-based Satyam Computer Services Ltd., has used the funds for general corporate purposes, primarily the repayment of its debt.

According to the prospectus, Satyam recorded more than 77,000 subscribers for its services as of August. It has more than 300 corporate customers for its private network services. Satyam is operating India's largest private data network utilizing Internet Protocol (IP) with points-of-presence in 25 metros in the country.

Satyam sources say, Internet users in India will grow at an average rate of 76 per cent annually to 4.5 million in 2002.

"We believe, our company is well positioned to take advantage of this significant market opportunity," claims the source, while warning that the market in India is currently in the early stages of development and involves "significant risks."

The company is the second Indian company to list on the Nasdaq.