The company is expected to raise around Rs 700 crore through the issue.
Digital solutions provider Happiest Minds Technologies has filed draft red herring prospectus (DRHP) with capital market regulator SEBI for an initial public offering (IPO), the first company to do so during the nationwide lockdown.
The proposed IPO consists of fresh issue of shares worth up to Rs 110 crore and an offer for sale of up to 3.56 crore equity shares by promoters as well as investors.
Founder and Executive Chairman Ashok Soota will sell 84,14,223 shares, while private equity investor JP Morgan Investment Management CMDB II will offload 2,72,49,362 shares, the prospectus says.
Promoter and promoter group hold 61.77 percent stake in the company, including 48.83 percent held by Soota. Investor CMDB II has 19.43 percent shareholding (2,72,49,362 equity shares) in the company.
The offer for sale shows that CMDB II wants to exit the company via IPO.
The company is expected to raise around Rs 700 crore through the issue, a source told Moneycontrol.
Out of the total offer, 85 percent of the money will be received by the selling shareholders, while the fresh issue money will be utilised by the company to meet working capital requirements.
Happiest Minds offers digital business, product engineering, infrastructure management and security services. In FY20, 96.9 percent of its revenues came from the digital-services business.
Globally, companies have been focussing more on digitalisation and listed IT peers have been increasing their digital share in revenue year-after-year.
A Frost & Sullivan Report estimates that the global digital-services market will grow from $691 billion in 2019 at a CAGR of 20.2 percent to $2,083 billion by 2025.
As of March 2020, the company had 157 active customers.
Happiest Minds reported a 404.6 percent growth in consolidated profit at Rs 71.71 crore in FY20 compared to the previous year due to other income, lower finance cost and depreciation. In FY18, it posted a loss of Rs 22.47 crore.
Revenue from operations grew by 18.3 percent to Rs 698.21 crore in FY20 and increased 27.5 percent to Rs 590.4 crore in FY19 compared to previous year.ICICI Securities and Nomura Financial Advisory and Securities India are the managers for the proposed IPO.