PE-backed ESDS Software Solution gets Sebi’s approval for IPO – VCCircle

Cloud services provider, ESDS Software Solution Ltd, has received the Securities and Exchange Board of India’s (Sebi) approval for its initial public offering (IPO), a posting on the market regulator’s website showed on Monday.  

ESDS’ offer comprises a fresh issue of equity shares of up to Rs 322 crore, and an offer for sale (OFS) of as much as 21.53 million shares by investors and promoters, according to the prospectus. ESDS Partners LLC will be selling 4.23 million shares, while South Asia Growth Fund II LP will be selling 16.86 million shares. South Asia EBT Trust has offered to sell 34,000 shares, while promoter Sarla Prakashchandra Somani has offered to sell 400,000 shares.  

ESDS will also mull a rights issue for existing shareholders worth Rs 60 crore through private placement or preferential offer. The fresh issue size will be then reduced to the extent of such a pre-IPO placement, if completed, according to the draft papers.  

Axis Capital Limited and IIFL Securities Limited are the book-running lead managers and Link Intime is the registrar to the issue.  

The company will be using as much as Rs 155 crore from the proceeds for purchasing cloud computing equipment for data centres. The company will use Rs 75 crore for funding its long-term working capital requirements, and Rs 22 crore for repaying or prepaying ESDS’s loans and for general corporate purposes, according to the draft papers.  

ESDS is a cloud service and end-to-end multi-cloud requirements provider. The company offers cloud computing infrastructure-as-a-service (IaaS), and software-as-a-service (SaaS) solutions among other cloud computing services. ESDS has introduced differentiated cloud-billing models such as pay-per-consumption and pay-per-branch for banks and pay-per-transaction for e-commerce customers, the company said.  

ESDS caters to various industries across sectors such as BFSI (banking and financial services), manufacturing, information technology, information technology enabled services, telecom, real estate, pharmaceuticals, retail and education. The company claims to have a presence in Europe, Middle East, Africa, the Americas and the Asia Pacific regions. ESDS also provides solutions to government ministries, it said.  

ESDS’ revenue from operations increased 8.43% in 2020-2021 (FY21) to Rs 171.93 crore from Rs 158.57 crore a year earlier, driven by growth in sales of cloud hosting and managed services, and technical support services. The company’s net profit for FY21 was Rs 5.48 crore, up from Rs 94 lakhs in 2019-2020 (FY20).  

In May, VCCircle had cited two people aware of the deal that the company is firming up plans to raise a significant funding round through a private placement ahead of an IPO, and is seeking a valuation of about Rs 4,000 crore from the primary market. One of the persons had also told VCCircle that the IPO process may start by July if the private round doesn’t work out. ESDS filed its draft papers with the Sebi in September.