Aegis Ltd., an outsourcing unit of Essar Group, may sell the first non-convertible dollar bonds from an Indian information technology company to fund expansion.
“It is still safest to have debt in dollars,” Aegis Chief Financial Officer C.M. Sharma said in an interview at the company’s office in Mumbai. “We have four loans in different currencies that we want to repay and keep some money to fund acquisitions. We would not want to dilute equity by issuing convertible bonds.”
The company, which bought PeopleSupport Inc. in 2008, may sell its bonds as part of a financing package that would include a loan of as much as $350 million to consolidate debt, he said.
India’s software services industry is recovering after customers cut spending amid the global economic crisis. Azim Premji, billionaire chairman of Wipro Ltd., India’s third- largest software exporter, said last month that he’s seeing “strong demand” after vendors cut prices and renegotiated contracts last year.
“India’s information technology and services companies typically are net cash positive and rarely need to issue debt,” said Hitesh Shah, an analyst at IDFC Securities Ltd. in Mumbai.
Essar Steel Holdings Ltd. in May postponed a sale of dollar bonds amid investor concern about contagion from Europe’s debt crisis. It later issued convertible bonds to its parent.
Aegis borrowed $116 million in 2008 to pay for its acquisition of PeopleSupport. The loan paid an all-in fee of 420 basis points more than the six-month London interbank offered rate, Sharma said.
Source:http://www.businessweek.com/news/2010-08-20/essar-s-aegis-plans-first-dollar-bonds-from-indian-i-t-company.html
