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Today, CDC Corporation (NASDAQ:CHINA) (Analyst Report) announced that CDC Software, a wholly-owned subsidiary has filed a registration statement with the SEC for an initial public offering (IPO) of 4.8 million American depositary shares (ADS) at an estimated price of $11.0- $13.0 range.

Of this total, 4 million ADS will represent newly-issued Class A ordinary shares being offered for sale by CDC Software and 0.8 million will represent Class A ordinary shares by CDC Software International Corporation, a wholly-owned subsidiary of CDC.

CDC expects to raise $43.4 million proceeds from the IPO and CDC Software International would receive net proceeds of $8.7 million. Thus the company expects to raise total proceeds of approximately $52.1 million from the IPO, assuming an IPO price per ADS of $12.00.

The offering will allow CDC Software to differentiate its line of business from CDC Corporation and expand sales channels, fund research and development activities and continue with its acquisition strategy. If executed, CDC Software will trade separately under the symbol ‘CDCS’ with the parent company being the major holder.

This IPO will help CDC Software achieve company-wide integration of business and technical information across multiple divisions and organizational boundaries. It will also help expand into other verticals and emerging markets such as India and China.

Post-IPO, CDC Corporation’s equity interest in CDC Software will be reduced from 100% to 83.4%, while CDC Corporation’s voting interests in CDC Software will be reduced from 100% to 98.1%. Lazard Capital Markets and JMP Securities are acting as underwrites in the deal.

We maintain our Buy rating on CDC’s shares.

Source: CDC Software Files IPO