ESDS Software Solutions Set to Make a Comeback with IPO

ESDS Software Solutions, a leading provider of AI-driven cloud and managed services, is gearing up for its second attempt to enter the Indian stock market. The company has recently submitted a draft red herring prospectus (DRHP) to the Securities and Exchange Board of India (SEBI) for an initial public offering (IPO), aiming to raise ₹600 crore. This follows an earlier attempt in September 2021.

IPO Details and Fundraising Goals

The upcoming IPO will involve a fresh sale of equity shares, each with a nominal value of ₹1. In addition to the primary offering, ESDS Software Solutions is also contemplating a pre-IPO placement that could raise up to ₹120 crore. Should this placement occur, it will decrease the size of the fresh issue, as indicated by the company.

Funds Allocation:

• ₹480.7 crore for the procurement and installation of cloud computing equipment and data center infrastructure.
• Remaining funds earmarked for general corporate purposes.

Allocation Strategy for Investors

In this IPO, the company has structured the allocation to cater to different types of investors:

• 75% of the offer is reserved for qualified institutional buyers (QIBs).
• 15% is designated for non-institutional bidders.
• 10% is available for retail individual investors.

Understanding ESDS Software Solutions

ESDS Software Solutions stands out as a comprehensive provider of AI-enabled cloud solutions, managed services, and data center infrastructure in India. A report by Nexdigm in the DRHP highlights that it is one of only two companies in India offering this extensive range of services. Notably, ESDS has reported higher operational revenue compared to its competitor as of Fiscal 2024.

Service Offerings:

• Infrastructure as a Service (IaaS)
  • Includes colocation and data center services.
• Managed Services
• Software as a Service (SaaS)

The company serves a wide array of sectors, including:

• BFSI (Banking, Financial Services, and Insurance)
• Healthcare
• Education
• Energy and Utilities
• Real Estate
• IT and IT-Enabled Services
• Agriculture
• Manufacturing
• Entertainment and Media
• Government Institutions

As of September 30, 2024, ESDS serviced 1,398 customers, showcasing its diverse clientele.

Industry Growth Potential

The Indian cloud services market is on track for substantial growth, primarily driven by the Digital India initiative, which is fostering government-led digital transformation. The market has exhibited a CAGR of 22.3% between Fiscal 2020 and Fiscal 2024 and is projected to continue expanding at a CAGR of 15.8%, escalating from ₹523.8 billion in Fiscal 2024 to a remarkable ₹1,844.1 billion by Fiscal 2030, according to Nexdigm.

Key Players Involved:

• DAM Capital Advisors Limited and Systematix Corporate Services Limited are the lead managers for the IPO.
• MUFG Intime India Private Limited will serve as the registrar for the offering.

As ESDS Software Solutions prepares for this key milestone, all eyes will be on how it successfully navigates the IPO landscape and leverages the booming demand for cloud services in India.