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
“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.