Hungarian IT services company Synergon Informatika Rt has kicked off an international roadshow to build a book for its initial public offering, leading to a listing on the Budapest and London stock exchanges which will value the company at about $123.5m.
The Budapest-based systems integrator is offering a total of 4 million shares, 400,000 of which will go to Hungarian retail investors, with the remainder destined for institutions in both the domestic and international markets. The 4 million shares represent 42% of the company’s total equity.
Synergon’s manager for investor relations, Tamas Garamszegi, said a further 400,000 shares from the institutional tranche can also be diverted to the retail one, if demand is particularly strong there. In addition, there is a greenshoe option of a further 600,000 shares. The probable date for the first day’s trading on Budapest and London is May 5, with bookbuilding ending on April 23.
The price range for the bookbuilding process is $10.60-$13 for the institutional tranche, while the retail tranche, which is controlled by different rules under Hungarian law, carries only a maximum price of 3,250 forints ($13.82). The lead managers for the operation are Nomura and CAIB.
Of the total number of shares going on sale, 2.3 million will be newly issued, the remainder being sold by existing shareholders. Assuming the final price is set at the top of the range, therefore, the company could raise as much as $30m from the IPO and assume a total value of $123.5m.
Garamszegi outlines three uses for the proceeds. Firstly we need more funds to finance working capital for the bigger projects we’re starting to handle, he began. Second, we plan to carry out acquisitions to complement our internal growth, and third, we’ll be developing a new business area, namely outsourcing, an activity which is still unknown in Hungary.
In addition to systems integration, Synergon presently carries out some software development of its own, primarily for the banking and insurance sectors. As for acquisitions, it will initially be looking for targets in Hungary itself, with its strategy for the international market being to go into partnerships in neighboring countries, then progress to acquisitions as their business develops.
Synergon showed a net profit of 700m forints ($3.0m) on revenue of 10bn forints ($40m) last year, with over 90% of its business coming from the Hungarian market.
