Cogent E-Services Ltd IPO - 7 things to know
Cogent E-Services Ltd, an end to end customer experience or CX solutions provider, had filed its draft red herring prospectus (DRHP) in early February 2022 and SEBI has not yet given its observations and approval for the IPO.
Normally, the IPOs are approved by SEBI within a period of 2 to 3 months unless there are other queries or clarifications that the regulator has. Thus the approval for the Cogent IPO should come in mostly by the month of April or May 2022.
The Cogent E-Services Ltd IPO will be a combination of a fresh issue and an offer for sale but the next step will be for the company to finalize on its issue date and issue price so that it can start the IPO process.
7 important things to know about the Cogent E-Services Ltd IPO
1) Cogent E-Services Ltd has filed for an IPO with SEBI and is currently awaiting SEBI approval to go ahead with the IPO. The IPO comprises of a fresh issue of Rs.150 crore and an offer for sale of 94.68 lakh shares.
Since the price band has not been decided yet, it is hard to tell the total size of the issue as it depend on the price at which the IPO band is set. The company has just given a rupee break-up of the size of the fresh issue and the offer for sale in terms of number of shares.
2) Let us talk about the offer for sale (OFS) portion of the IPO first. A total of 94.68 lakh shares will be sold by the early investors and promoters as part of the offer for sale. The OFS component will not result in any fresh fund infusion or dilution of the capital or the EPS.
However, the selling of stake by the promoter will increase the free float of the company and facilitate listing of the stock.
The main sellers in the OFS include 15.39 lakh shares by Abhinav Singh, 15.39 lakh shares by Arunabh Singh, 15.39 lakh shares by Gaurav Abrol, 15.39 lakh shares by Pranjal Kumar, 18.39 lakh shares by Bloomberg Technology LLP and 14.72 lakh shares by TSSR Technology LLP.
3) The fresh issue portion of Rs.150 crore will issue fresh shares in the quantum based on the total price of the offer as decided. Let us now look at how the funds raised via fresh issue will be utilized by Cogent. It will use the funds predominantly to fund investment in IT assets, expansion of the existing IT infrastructure as well as for working capital needs of the company as well as for general corporate purposes.
4) Cogent is likely to look at a pre-IPO placement of shares worth Rs.30 crore ahead of the IPO. This is normally the shares that are placed with HNI, family offices and qualified institutional buyers or QIBs.
Normally, the advantage in pre-IPO placement is that it helps to gauge appetite. More importantly, while pre-IPO placement has a longer lock-in period, it offers more flexibility in pricing compared to anchor placements. If the pre-IPO placement is successful, then the size of the issue will be reduced proportionately.
5) Cogent is an end-to-end customer experience or CX solutions provider. This is normally the front end interface that needs to be made user-friendly for ecommerce transactions and that is what Cogent focuses on.
The company offers omnichannel solutions along various customer interaction touchpoints. It covers customer sales and support through voice and non-voice channels. In addition, Cogent also focusses on back office solutions and transformative services to enhance the power of digital marketing on the brand.
6) The clients of Cogent E-Services Ltd are spread across a complete spectrum of more than 10 industry verticals and practices including banking and financial services and e-commerce.
This makes the business model of the company less vulnerable to sectoral cycles and offers a more de-risked solution to their long term sustainability.
7) The IPO of Cogent E-Services Ltd will be lead managed by IIFL Securities and DAM Capital Services (formerly IDFC Securities Ltd). They will act as the book running lead managers or BRLMs to the issue. The stock will be listed on both the premier exchanges viz. the BSE and the NSE.
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