Persistent Systems, the Pune-based outsourced product development outfit recently funded by US-based venture funds Norwest Venture Capital and Gabriel Venture Capital, is coursing towards an IPO by April next year to raise some $30-50 million (Rs 200-250 crore).

The two funds invested $18.8 million (Rs 86 crore) in Persistent in December 2005, and Norwest’s Promod Haque and Gabriel’s Navin Chaddha got management positions with Persistent.

During the current quarter, Persistent signed up 25 new customers and is now shoring up for an IPO to raise roughly Rs 200 crore as the VCs seek to ‘‘create a bigger company’’ out of it.

‘‘There is an understanding today that you can create bigger companies in India than in the US. The US’ product development market is worth $20 billion, of which we believe Persistent can get a big share. The IPO will also help it meet industry’s growing expectations on corporate governance,’’ said Navin Chaddha.

Persistent is profitable and has shipped 700 products before last year’s VC funding came through. Apart from the relative ease of going public in India and the lower compliance costs involved in staying listed, an IPO my prove the best way to raise funds in relatively cash-strapped India.

‘‘In India we can go public with $15 million. Because not a lot of capital is otherwise available, the IPO route is favoured and that is why you see 4-5 IPOs every month. There are also lower compliance costs and fewer liabilities with CEOs and CFOs in India compared with the US,’’ says Chaddha.

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