Monday, May 31, 2010

Fatpipe Networks IPO

Analysis
Fatpipe Networks provides global corporations and government offices with technology that increases the security and reliability of Wide Area Networks, corporate extranets, Virtual Private Networks and all last-mile Internet connections, including wireless connectivity. The company holds patents on a technology called 'Router-Clustering', which enables customers to obtain highly redundant and fast Internet/WAN access.

Promoters and their group hold 37.29% stake in the company. Major shareholders like Sanchaita Datta, vSpring Management and Ragula Bhaskar have over 16% stake each in the company.

The company has come out with an IPO. It will open on 7th June and close on 9th June. It has fixed a price band for its public issue at Rs 82-85 a share.

Issue proceeds will be used for expanding the product line with enhanced research and development activities, specifically for development of new product-lines; for establishing 16 new Marketing Offices across the globe including additional offices in the USA; for strategic acquisition of business/ company and for margin money for working capital requirement. The company estimated cost for above objects at Rs 6.76 crore, Rs 10.08 crore, Rs 15 crore and Rs 7.2 crore, respectively.

The book running lead manager to the issue is Keynote Corporate Services and Karvy Computershare Private Limited is the registrar.

Company website: http://www.fatpipeinc.com/

The company has come out with an IPO at tough times. The proposition looks good but will depend on investor response.

Recommendation
We would not recommend this issue to the investors at this time. Most of the recent IPOs have had a tough run after listing. There is a tough competition which the company faces and the valuations does not seem to be cheap for investors to take the risk at this time.

Subscription
The IPO has been withdrawn due to poor investor response on the issue.

The IPO did not manage to get fully subscribed. At the close of the IPO, it was subscribed around 0.75 times.

QII segment got subscribed 0.85 times
NII segment got subscribed 1.52 times
Retail segment got subscribed 0.22 times

After the poor subscription, the company revised the price band to Rs. 80 - Rs. 85 from the earlier Rs. 82 - Rs. 85 and extended the IPO till 14th June.

At the 2nd close of the IPO, it did not get fully subscribed.

QII segment got subscribed 0.94 times
NII segment got subscribed 2.12 times
Retail segment got subscribed 0.25 times

Allotment
IPO Withdrawn due to poor response.

Listing
IPO Withdrawn due to poor response.

4 comments:

Post a Comment