Newgen Software Technologies Ltd, the New Delhi-based IT firm backed by various private equity and venture capital firms, made a positive start on its stock market debut on Monday with its shares listing at a premium. The stock moved higher in early trade before paring gains on profit-taking.
Shares of Newgen Software began trading on the BSE at Rs 253 apiece, up 3.25% from the initial public offering (IPO) price of Rs 245, stock-exchange data showed. The stock touched a high of Rs 266.50 and low of Rs 245.95 per share on the first day of trade.
The BSE’s benchmark Sensex pared some of its early gains to end up 0.65%. The 30-share index rose 1%, scaling new peaks. Finance Minister Arun Jaitley tabled The Economic Survey 2018 in both houses of the Parliament. The report has estimated that the Indian economy will grow by 7-7.5% in 2018-19, making the country the fastest growing in the world.
Newgen Software is the second company to list on the bourses this year. Apollo Micro Systems was the first company to list in 2018. Its shares listed at a 74% premium, after an IPO that saw record demand. Apollo’s shares have touched the 5% lower circuit every day since its listing, falling to Rs 369.95 apiece from a high of Rs 479.55.
Newgen Software now commands a market capitalisation of Rs 1,751.66 crore against a valuation of Rs 1,696.27 crore it sought at the upper end of the Rs 240-245 price band in the IPO, which was subscribed eight times.
The Rs 425-crore IPO resulted in a 25% stake dilution on a post-issue basis. It comprised a fresh issue of shares worth Rs 95 crore and a sale of 13.45 million shares by existing shareholders.
Newgen Software's investors included Ascent Capital, IDG Ventures and SAP Ventures. VCCircle had previously reported that the PE and VC backers were poised to score handsome returns with their exit from Newgen.
Ascent Capital, which was established under the Unit Trust of India, and IDG Ventures sold a major chunk of their holding. Vistra ITCL and SAP Ventures fully exited their four- and 10-year-old investments, respectively, according to regulatory filings.
Newgen had filed its draft prospectus with SEBI on 27 September 2017. It received the regulator’s nod on 17 November 2017.
The company will use the proceeds from the fresh issue to buy and furnish office premises in Noida. It will use the balance amount for general corporate purposes.
ICICI Securities, Jefferies India and IDFC Bank managed Newgen’s IPO.
Newgen offers a software platform that enables customers to develop applications for their businesses. The platform comprises enterprise content management tools that help digitise content and information, business process management and customer communication.
It earns revenue from multiple streams such as the sale of software products. It also earns annuity-based revenue such as software-as-a-service subscription fees, and annual technical and annual maintenance charges. The company had about 450 customers in almost 60 countries as of 30 June 2017.
