Persistent Systems on course for IPO

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.

Gabriel itself is very bullish on India, he promises. The $260 fund has total assets worth roughly $0.5 billion, and though no specific allocation is for India, a lookout is on for 2-3 new early or mid-stage tech companies to invest in.

These are likely to be announced in April, and will be on the consumer end of the telecom, auto component, financial services, travel or retail sector. ‘‘Gabriel typically places $1-5 million in a single investment,’’ Chaddha said. ‘‘We are keen on mobile applications such as ring tones and wallpapers, internet sites like job and matrimonial web sites,’’ he said.