Update: We made a typographical error: it should have been $86 million. Thanks for correcting us.

The board of Nasdaq-listed Indian Internet and IT firm Sify Technologies has approved the allotment of 125 million preferential shares at Rs. 32 per share to a group of investors affiliated with its promoter group, including entities affiliated with CEO & MD Raju Vegesna and his brother, Executive Director Ananda Raju Vegesna. The total issue of shares, of around $86 million, is in the unlisted Indian entity, and not the NASDAQ listed entity – so the shares will not be available for trading. The issue of shares is subject to shareholder and regulatory approval.

The shares of face value Rs 10 are being issued at Rs. 32 ($0.69) each. That’s a discount of 47.72% to the current market price of $1.32, and according to the company, the discount is because “the proposed allotment of shares is for unlisted Indian equity shares.” But if Sify lists in India, the prevailing NASDAQ price will serve as a benchmark, in all likelihood.

In its press release, Sify says that the proposed issuance will be utilised for working capital, ongoing capital expenditure and future expansion, but one should keep in mind that Sify might be mandated to list in the Indian market. You have to ask the question – why would the promoter group take stake in the unlisted entity, if there wasn’t an exit looming large?

Sify hasn’t been profitable consistently – the only profit in recent memory was probably due to a settlement with Yahoo – for a while, but the company’s enterprise business has been growing rather well, even as its consumer business shrinks into obscurity (7.9% of total revenues). Sify has reports revenues of upwards of $30 million each quarter for the last two years.

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