Happiest Minds’ Rs 700-crore IPO opens on September 7

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BENGALURU: Ashok Soota’s nine-year-old, $100-million IT services venture Happiest Minds is going public. The issue opens on September 7 and ends on September 9. The price band has been set at Rs 165-166 per equity share, which values the offering at Rs 702 crore at the upper end.
“People thought we were crazy to file for an IPO in the middle of a lockdown,” Soota told TOI. But he said there were good reasons for it. He said almost 76% of his business is not affected by the pandemic and lockdown. More than half of that comes from edutech and hi-tech. The company also gets significant revenue from the health, e-commerce and security & infrastructure verticals, all of which are doing well.
Happiest Minds’ positioning as a pure digital services company is also expected to help. “Digital is growing much more than traditional IT services which is what enables us to grow at 20.8% (last three years’ CAGR), whereas the industry has slowed down to 8-10%. We knew this was going to be a difficult year but I knew I could make up for any loss of revenue through our profitability,” Soota said. In fiscal 2020, Happiest Minds had a profit of Rs 72 crore on revenue of Rs 714 crore. The EBITDA CAGR was 285% in the last three years.
A JP Morgan fund which invested in Happiest Minds five years ago is offering all its shares for sale in the IPO. Soota, who holds almost 49% of the company’s shares (62% with his family), is offering a part of his equity for sale. These together will amount to Rs 592 crore at the upper end of the price band. There will also be a fresh issue of shares totalling upto Rs 110 crore.
Soota said he has always wanted to run public companies. He had previously co-founded Mindtree, which went public in 2007, eight years after its founding. He said there’s pressure to improve corporate governance when a company goes public. He said depending too much on private capital doesn’t help. “Uber and Lyft have been trading below their IPO price,” he said.

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