Ashok Soota founded Happiest Minds gets SEBI nod for IPO

Information technology services firm Happiest Minds has received approval from the market regulator Securities and Exchange Board of India (SEBI) for listing in stock exchanges. 

The initial public offer (IPO) will see its main investor private equity JP Morgan's CMDB 2 exit the company, according to a statement. 

Bengaluru-based Happiest Minds filed for an IPO in June. The offer also comprises fresh issuance of shares aggregating up to Rs 110 crore and an offer for sale of up to 3.56 crore equity shares, according to the draft red herring prospectus (DRHP) filed by the company.

The offer for sale is estimated to be worth Rs 590 crore making the IPO size close to around Rs 700 crore. The company will not receive any proceeds from the offer for sale. 

Founded in 2011 by Ashok Soota, the company reported total revenue of Rs 714 crore in sales during the financial year ending March 2020, a rise of 18.6% over March 2019. The company also reported five times growth in profit at Rs 71 crore during FY 20. Soota holds close to 49% shares in the company. CMDB 2 holds another 19.5% pre-offer, it said in the DRHP.

Promoter and executive chairman Soota and CMDB 2 will sell their stake in the offer for sale. The selling shareholders will be entitled to their respective portion of the proceeds of the offer for sale. 

ICICI Securities and Nomura Financial Advisory and Securities (India) are the managers for the offer.

The company's shares are proposed to be listed on the BSE (Bombay Stock Exchange) and the NSE (National Stock Exchange). The IT services company proposes to utilise the net proceeds from the fresh issue to meet the long-term working capital requirement and general corporate purposes.

Soota was also the founding chairman and managing director of another IT services firm Mindtree, which was acquired by engineering conglomerate Larsen and Toubro last year. Prior to that, he was also the vice chairman of the country's fourth-largest IT services firm Wipro.

Happiest Minds works with enterprise customers to enable their digital transformation by delivering seamless customer experience, business efficiency and actionable insights, it said. The company also leverages technologies such as data analytics, artificial intelligence, cognitive computing, internet of things, cloud, security, blockchain and automation including RPA (robotic process automation), the statement said.

The company works with customers in industry sectors such as retail, edtech, industrial, financial services, hi-tech, engineering research and development, manufacturing, travel, media and entertainment, among others.

During the financial years between 2018 and 2020, Happiest Minds generated most of its sales from the US market, which contributed 73.5%, 75.5% and 77.5% of revenue from operations during the financial years. These figures are much higher than what mainstream large IT firms generate from the US market, which is between 45-60%.