Many IT IPOs in offing

Many small and medium IT firms, including Servion Global Solutions, Accel-ICIM Frontline, Bahwan Cybertek and Dax Networks, are planning initial public offerings (IPOs) to fund their expansion plans.

Though the timeframe for the IPOs is yet to be finalised, it is learnt that the companies would hit the market in the next 12-18 months. Many of these companies are closely-held while some of them have significant holdings by foreign partners or private equity funds.

According to merchant banking sources, there was a strong appetite for good quality IPOs, and these companies could form the next wave from the IT sector, after the first one in the late '80s and early '90s when Infosys, Satyam and Wipro hit the markets.

The IT firms planning IPOs have an annual turnover of Rs 50-150 crore, and will look at diluting the capital base by at least 20% through the public issues.

Servion Global Solutions, which is expected to post a turnover of $12 million during the current fiscal, is going ahead with its plan for the IPO, a top company official confirmed. Private equity funds Citigroup and TDA Capital hold 32% and 7%, respectively, in the company, but it is not clear whether the funds would exit or dilute their stakes during the IPO.