Upcoming IPO: ESDS Software Solution refiles DRHP for ₹600 crore public offer

Upcoming IPO: ESDS Software Solution, an end-to-end AI-enabled cloud, managed services, Data Centre infrastructure and software solutions provider, is making a second attempt to enter the Indian stock market. For this purpose, the company has filed a draft red herring prospectus with the stock market regulator, Securities and Exchange Board of India (SEBI), for an initial public offer (IPO). The company had earlier filed a DRHP in September 2021.

The company looks to raise ₹600 crore via the IPO which is solely a fresh sale of equity shares with a face value of ₹1 each.

ESDS Software Solution may consider further issue of shares through a preferential offer or any other method aggregating up to ₹120 crore, as pre-IPO placement. If such placement is completed, the fresh issue size will be reduced, the company said.

ESDS Software Solution IPO Objective

Out of ₹600 crore, the company plans to use ₹480.7 crore for the purchase and installation of cloud computing and other equipment and infrastructure for its data centres. Meanwhile, the remaining funds will be used for general corporate purposes.

In the said IPO, not less than 75% of the offer shall be reserved for qualified institutional buyers, and not more than 15% shall be available for non-institutional bidders. Additionally, not more than 10% of the offer shall be available for allocation to retail individual investors.

About ESDS Software Solutions IPO

ESDS Software Solutions is an end-to-end AI-enabled cloud, managed services, Data Centre infrastructure and software solutions provider in India. According to the report by Nexdigm cited in the DRHP, the company is one of the two players in India providing the entire spectrum of cloud, managed services, Data Centre infrastructure and software solutions in India. Further, among the two, ESDS has a higher revenue from operations as of Fiscal 2024.

The company offers a comprehensive platform of cloud infrastructure and software solutions, which includes Infrastructure as a Service (IaaS), categorised into colocation and data center services, cloud services, and cloud computing; Managed Services; and Software as a Service (SaaS).

It has a diversified customer base, which includes customers from BFSI, Enterprises, including customers in the healthcare, education, energy and utilities, real estate, IT and IT-enabled services, agriculture, manufacturing, entertainment and media sectors; and Government, such as government institutions/departments. In the six months ended September 30, 2024, the company serviced 1,398 customers.

Industry Outlook

The cloud industry in India is poised for rapid growth, according to the DRHP, due to the Digital India initiative driving Government-led digital transformation, which requires scalable cloud infrastructure.

The Indian cloud services market has grown at a CAGR of 22.3% during Fiscal 2020 to Fiscal 2024 and is expected to grow at a CAGR of 15.8%, from ₹523.8 billion in Fiscal 2024 to ₹1,844.1 billion in Fiscal 2030, as per Nexdigm.

DAM Capital Advisors Limited and Systematix Corporate Services Limited are the book-running lead manager to the issue and MUFG Intime India Private Limited is the registrar to the offer.

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