India's VC-backed Newgen files for IPO
India-based business management services provider Newgen Software Technologies has filed for an IPO that will provide exits for Ascent Capital, IDG Ventures India and SAP Ventures.
Newgen offer an undisclosed amount of new shares along with up to 13.5 million shares from existing shareholders, according to a prospectus. Ascent and IDG will sell 7.5 million and 3 million shares respectively, and will each retain 60 shares following the offer. SAP will sell all of its 2.2 million shares.
Pricing has not been announced. The company hopes to raise INR950 million ($14.5 million) from the fresh offer, INR843 million of which will be used to buy and furnish new office premises in Uttar Pradesh. The remainder of the capital raised will be used for general corporate purposes.
Newgen's software platform allows companies to design and implement applications aimed at their strategic business needs, along with customer communication management and business process management tools. As of June 2016, the company had more than 450 active customers in over 60 countries worldwide, including Trust Company of America, ICICI Bank, Reliance General Insurance and Philippines Resource Saving Bank.
Global combined spending on this software segment is expected to grow from $377 billion in 2017 to $510 billion in 2021. Newgen sees its diversified customer base, which includes users in the government, financial services, healthcare, insurance and business process outsourcing segments, as a key advantage in its efforts to establish a commanding presence in the sector.
The company derives its revenue both from one-time sales of software products and recurring charges for subscriptions to the company's cloud services, technical support, and maintenance. For the year ended March 2017, Newgen recorded INR3.9 billion in revenue, up from INR3.2 billion the year before. Over the same period, net profit grew from INR277 million to INR502 million.
Newgen's former PE backers include Headland Capital Partners, which committed INR300 million in the company in 2008. SAP committed INR100 million later the same year. Headland exited its stake in 2014 when IDG and Ascent committed INR1.1 billion for a minority interest.
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