India: Tejas Networks’ IPO to launch today

Telecom tower sector is being consolidated by global investment funds
Photo: Priyanka Parashar/Mint

Telecom equipment maker Tejas Networks Ltd will launch its initial public offering (IPO) today.

The company has fixed a price band of Rs250-257 per share for the IPO. The offering will close on 16 June.

This is the second time the company is planning an IPO, after abandoning its previous attempt at a public offering in 2008-09.

The IPO will see the company raise Rs450 crore of primary capital through a fresh issue of shares, while certain existing shareholders of the firm will sell shares worth Rs326 crore through an offer for sale.

Investors selling shares in the IPO include Cascade Capital Management Mauritius, India Industrial Growth Fund (Frontline Strategy), Intel Capital and Sandstone Capital.

Other investors in the company include the likes of Goldman Sachs, Mayfield and Samena Capital.

In October 2007, the company had raised $24 million (Rs95 crore) from Goldman Sachs. Earlier in 2006, it had raised $20 million in a round led by Sandstone Capital. In 2009, Frontline Strategy, a Singapore-based PE firm, bought a 2.44% stake in Tejas through a secondary transaction. Samena Capital invested in the company last year.

Tejas is an optical and data networking products company with customers in over 60 countries. It designs, develops and sells high-performance and cost-competitive products to telecommunications service providers, internet service providers, utility companies, defence companies and government entities.

Its products find application in building high-speed communication networks that carry voice, data and video traffic from fixed line, mobile and broadband networks over optical fibre.

As of 30 April, Tejas Networks has filed 333 patent applications, with 203 filings in India, 89 filings in the US and 6 filings in Europe, out of which 56 patents have been granted.

The company follows an asset-light strategy by outsourcing most of its manufacturing to reputed electronics manufacturing services companies. The strategy allows it to scale up production without requiring a corresponding increase in capital expenditure towards building its own manufacturing operations.

For the financial year 2016-17, Tejas Networks reported a revenue of Rs865.3 crore, up from Rs625.5 crore in the previous financial year. It reported a profit of Rs53.2 crore in 2016-17, compared to a profit of Rs27.4 crore the previous year.

Axis Capital Ltd, Citigroup Global Markets India Pvt. Ltd, Edelweiss Financial Services Ltd and Nomura Financial Advisory and Securities (India) Pvt. Ltd are managing the Tejas IPO.

Earlier this week, Mint had reported that several companies, including Tejas Networks, are gearing up to launch their IPOs in June. These include private equity firm ChrysCapital-backed pharma company Eris Lifesciences, depository services firm CDSL Ltd and small finance bank Au Small Finance Bank Ltd. Collectively, these four firms are looking to raise over Rs5,000 crore through their initial share sales.

So far this year, eight companies have raised Rs6,335.83 crore through IPOs, while last year 26 companies raised Rs26,493.84 crore through this route.

Also Read: India: IPOs worth $775m lined up in June

This article was first published on LiveMint.com.