The private placement is being done at a floor price of Rs 700. During thethird quarter, Pentasoft had a turnover of Rs 287 crore and a net profit ofRs 55 crore. Pentasoft chairman, V Chandrasekaran defended the price of Rs700 on the performance grounds. The funds are being raised to finance itsacquisition of business software division of Pentamedia Graphics at a costof $205 million, as per the valuation undertaken by PricewaterhouseCoopers.This division, having presence in banking, insurance and ERP, had a turnoverof Rs 200 crore for the third quarter. The acquisition price will be paidthrough a combination of cash and stock.

According to company chairman, V Chandrasekaran, the funds will also beutilised for acquistions in Australia and the United States and an expansionplan currently being worked out. "We will be using around $22 million forthe working capital requirements," he said.

Pentasoft at present has five divisions; education, application services,system integration, software engineering and multimedia including CAD/CAM,and Internet communication.

Chandrasekaran said that software division has tremendous opportunities asmost of the small and medium enterprises are expected to opt for applicationservices rather than investing huge sums in products. "We will play a majorrole in ERP implementation, which will boom towards the first quarter ofthis year," he said.

With the issue of 15 million shares, the total shares will go up to 23million. At present, the promoters hold around 33 per cent in Pentasoft,which is expected to be maintained with their participation in the issue,say sources close to the issue.

INSIGHT :
Firm acquires 2 Australian companies
Pentasoft Technologies has acquired two Australian companies as part of itsmajor acquisition drive. The companies, Rengain Pty Ltd and Ozi ResourcingLtd have been acquired for their diversity and wide contacts amongAustralian industry and government. Pentasoft will spend around $10 millionfor the purpose.

"Australia is traditionally a SAP favourite country and these acquisitionwill strengthen our ERP implementation plans," Pentasoft chairman VChandrasekaran said. SAP is the leading ERP vendor in the world.Rengain Pty has a turnover of A$7.5 million and employs around 55 peoplewhile Ozi Resourcing is an IT consultancy firm with expertise in banking andfinancial sectors with clients like Qantas and International Olympiccommittee of Australia.

"We are now looking at few US companies as potential candidates,"Chandrasekaran said. Few companies in the financial services areas have beenshortlisted, he added. Chandrasekaran also said that the American Depositoryshares plan is still on.