datawind

Canadian tablet manufacturer Datawind, known for making the Aakash tablets, has raised C$30 million (around $27.86 million) from its initial public offering (IPO) on the Toronto Stock Exchange last week.

Through this offering, Datawind has issued 6.32 million common shares (6,316,000 common shares) at a price of C$4.75 per share at a pre-IPO market cap of C$104 million.

It however has had a shaky debut: Datawind closed at C$4.38 on the day it made its debut (July 8), down 7.8% from the issue price and it has gone up to a peak of C$4.50 ever since, which is still down 5.3% from the issue price. At the days’ close yesterday, the shares were trading at C$4.20. This gives the company a market cap of C$92.33 million, however note that the market cap will change with market fluctuations.

This offering was made through a syndicate of underwriters led by Canaccord Genuity Corp and includes National Bank Financial Inc., Cormark Securities Inc. and Haywood Securities Inc, who have an over-allotment option to purchase up to an additional 947,400 common shares at C$4.75 per share for additional gross proceeds of C$4.5 million (C$$4,500,150) if the option is excercised in full. This option is exercisable until August 8 i.e. 30 days from the closing of the offering.

Use of Proceeds

After deducting underwriting discounts and other expenses, Datawind is expected to receive $25.7 million in net proceeds from the offering ($29.93 million if the over-allotment is exercised in full). The company plans to use the funds raised as follows:

– Around C$10 million as incremental working capital to support the increased manufacturing volume with its contract manufacturers.
– around C$5 million to launch infomercials, introduce broader retail sales channels and offer retail credit terms.
– around C$3.3 million to expand into new geographical locations including markets such as Asia, Africa, and Latin America over the next two years.
– around C$3.7 million to build out its management team and retain additional key personnel.
– around C$1.31 million for fulfilling unpaid salaries, fees to consultants and advisors and all outstanding related party loans and accrued interest.

Remaining proceeds to fund other working capital and for general corporate purposes.

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Datawind had initially filed for an IPO with the Canadian security regulators to raise C$30 million, at a valuation of around C$117 million (around $108.7 million).

The company had reported total revenues of £3.26 million and a net loss of £0.34 million for the quarter ended December 31, 2013.

Datawind currently makes money through the sale of tablet & smartphone devices and sale of Internet services. It offers six models of UbiSlate tablet and three models of its PocketSurfer smartphones which range between Rs 3,499 – Rs 6,499. It also plans to generate revenues through the sale of targeted online advertising in the future.

Datawind was selected by the Indian government to manufacture the low-cost Aakash tablets back in 2010, however this project has been mired in controversies ever since its inception. It had taken a major hit after reports surfaced that the tablet was bought off the shelves from China, instead of manufacturing or designing it in India.

The next version of Aakash tablet was expected to be out in April, after the government had floated a tender in January for the same. While we weren’t able to find any further updates on this, a PTI report suggests that Datawind has been selected for supplying Aakash 4 and it will cost  aroundRs 3,500.