All You Need To Know About Telecom Equipment Maker Tejas Networks’ IPO
Tejas Networks looks to raise up to Rs 777 crore from its initial public offering.
Top five investors selling shares in Tejas Networks Ltd.’s initial public offering stand to make at least twice their investment in the telecom equipment maker.
The Bengaluru-based company is selling shares at Rs 250-257 apiece to raise close to Rs 777 crore from the offer, which is a mix of fresh issue and offer for sale. The company is looking to raise Rs 450 crore from the fresh issue, while the promoters will sell 1.27 crore equity shares.
The three-day offer opens for subscription on June 14.
Who’s Selling Shares
Tejas Networks, like ICICI Bank Ltd., ITC Ltd., HDFC Ltd. and Larsen & Toubro Ltd., does not have any existing shareholders classified as a promoter group. Of its 639 public shareholders, 45 are looking to sell 17.6 percent of the pre-issue share capital in the public offer.
Use of Funds
While more than 65 percent of the proceeds will go towards working capital, a part of it will be spent on capital expenditure and towards payment of salaries and wages of research and development team. The remaining will be set aside for general purposes, according to the company’s red herring prospectus.
“We want to increase our R&D investment since we are in the technology business. So we will invest more to make our products more competitive,” said Sanjay Nayak, chief executive officer and managing director of Tejas Networks.
Company’s Business
Tejas Networks is an optical and data networking products maker with customers in over 60 countries. It designs, develop and sells high-performance and cost-competitive products to telecommunications and internet service providers, utilities, defence companies and government entities. It has four sales offices in India and six sales offices overseas, from where it generates 35 percent of its revenues.
Nayak said the company will have a two-pronged approach.
Tejas Networks will increasingly work towards expanding in emerging markets like South East Asia, Africa, and Latin America. “These regions are like India where infrastructure is not there. And they also need to transform from voice-based to data,” he said.
Nayak said the company would also focus on its original equipment maker (OEM) business.
Tejas Networks has appointed Axis Capital, Citigroup Global Markets Edelweiss Financial Services and Nomura as the book-running lead manager for the issue, the the ninth IPO in 2017. So far, eight companies have raised Rs 6,336 crore from the primary market.