Satyam Prices New Issue At $80 Per Ads

Satyam Infoway's second offering of American Depository Shares (ADS) has been priced at $80 per ADS, a nine per cent premium over the previous seven-day average price.

According to Amit Chandra, co-head, investment banking, at DSP Merrill Lynch, the demand for the stock is close to $2 billion, 15 times more than the offering of $150 million. Merrill Lynch is the lead book-runner for the issue.

The last traded price on the Nasdaq post-pricing was $83 per ADS.

"The second offering of Satyam Infoway has been oversubscribed 15 times. The total demand is $2 billion or Rs 9,000 crore, from a mix of leading institutional funds, global specialist technology funds and retail investors in the US," Chandra told Business Standard yesterday after the completion of the pricing formalities.

 

Each ADS represents one-quarter of a domestic Satyam Infoway share. After dilution, the company's outstanding share capital will increase from 2.18 crore to 2.22 crore shares.

Satyam Infoway is expected to utilise these proceeds for funding its acquisition of IndiaWorld Communications. "On November 29, 1999, we purchased 24.5 per cent of the outstanding shares of IndiaWorld Communications for a cash purchase price of Rs.122.2 crore ($28 million). In connection with the acquisition, the shareholders of IndiaWorld granted us an option to acquire the remaining 75.5% of the outstanding shares of IndiaWorld for a cash purchase price of Rs.376.7 crore ($87.0 million) exercisable between April 1, 2000 and September 30, 2000, provided that the exercise price will increase at a rate of 16% per annum after July 1, 2000 if the option is not exercised prior to that date," Satyam Infoway has stated in its mandatory pre-issue filing with the Securities Exchange and Commission, US. The company has already made a non-refundable deposit of Rs 51.3 crore towards the exercise price of the option. The remaining 75.5 per cent of the outstanding shares of IndiaWorld will be purchase through proceeds of this offering. Chandra said that the during the roadshow itself there was an increased interest in the offering. "The stock has appreciated 78 per cent since the roadshows. While NASDAQ composite index has increased only by 5 per cent. This clearly indicates the confidence the US investors have in the Indian internet and technology segment," Chandra added.