Sify Technologies Limited, an Internet service provider, has decided to issue equity shares up to $86 million to a group of investors affiliated to its majority owner, including entities of Raju Vegesna, Chief Executive Officer and Managing Director and Ananda Raju Vegesna, Executive Director and brother of Raju Vegesna.

The proposed issue will consist of 125 million equity shares of Rs.10 each at a purchase price of Rs.32 per share.

This includes a premium of Rs.22 per share, or $0.69 per share, based on an exchange rate of Rs.46.22 to the dollar.

The shares will be issued at a discount to the prevailing American Depositary Share market price, since the proposed allotment is for unlisted Indian equity shares. The proposed shares will not be registered in the U.S. or traded on Nasdaq as American Depositary Shares.

The proposal for a preferential allotment has been approved by the board of directors of Sify Technologies at a meeting held on August 4. This has been recommended to the shareholders for their approval at the forthcoming annual meeting to be held on September 27. The proceeds raised through the issue will be utilised for working capital, ongoing capital expenditure and future expansion.

According to official sources, at present, the company's capital has two components. The India component had 26 per cent and the foreign component 74 per cent. After the proposed issue, the holdings of the promoter will increase from 52 per cent to over 70 per cent.

According to a Finance Ministry directive, a company cannot come up with a follow-on ADR issue if it is not listed in the Indian stock exchange. Since Sify is not listed in the Indian market, the company has opted this method is issuing shares to the promoters.

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