The bear market and a shaky economy aren’t swaying UST Global Inc. from its long-held plans to go public.
The Aliso Viejo-based company, which provides custom software services, outsourcing and consulting for Fortune 500 corporations, is eyeing an initial public offering in early 2010.
“We are still optimistic that we’ll stick to the timeline,” said Chief Executive Sajan Pillai. “It’s a matter of when, not if.”
The company has formed an executive committee of public company veterans and hired a consulting company to help it get into compliance with the Sarbanes-Oxley Act and other regulations.
“We’ve started our processes for compliance and we are also now starting to get some talks going with the investor communities,” Pillai said. “Most of the stuff we are doing is related to getting ready internally.”
Earlier this year, UST shuffled its executive ranks.
A few months ago the company promoted Krishna Sudheendra to chief financial officer. His previous post was as director of finance. Sudheendra is set to get the company’s house in order before going public, including adopting corporate governance norms, implementing accounting standards and rolling out an employee stock option program.
Four members of the company’s team were promoted, including Pillai, who previously was president and chief operating officer.
Satendra “Dan” Gupta, who was chief executive for four years, stayed on as chairman.
UST, which has 90 workers here and 6,000 worldwide, isn’t going public to raise money.
“We don’t have pressure to go public, mainly because the company itself is very sound financially,” said Chief Operating Officer Joseph Nalkara.
The company expects to see sales of $250 million for this year and expects revenue to grow by 45% next year.
“We feel pretty confident in that growth number,” Pillai said.
UST is looking to Wall Street mainly because many of its customers and potential customers prefer to do business with public companies.
“There’s much more transparency and scrutiny in terms of financials and public disclosure, so it makes it much easier for them,” Nalkara said.
An IPO would also allow its workers, who are stakeholders in the company, some degree of liquidity.
Software
UST builds custom software for large companies in several markets, including healthcare, insurance, finance and media.
When UST makes a deal to build software for a company, it usually brings in $5 million a year for a minimum of three years. Deals for multiple projects can fetch up to $100 million.
“That’s the reason we can have fewer customers, because the customers we do have spend significantly,” Nalkara said.
Roughly 40% of its sales come from building software, 50% from testing and maintaining it and 10% from consulting work.
Customers include Dell Inc., Apria Health-care Group Inc., Carnival Corp.’s Princess Cruise Lines Ltd. and San Diego’s Sempra Energy.
The software it builds usually automates some task that’s specific to an industry.
For Dell, UST created a program that can sort through and apply the myriad tax laws that apply to goods sold around the world.
The company is seeing sales grow as corporations look for cheaper ways to meet their technology needs and stay competitive.
“We become more attractive when companies are facing financial pressure,” Pillai said. “They still have to run their businesses, so we become more and more relevant. We do very well in times of economic scrutiny.”
The company has smaller offices in Malaysia, the Philippines, Hong Kong, Singapore and Canada. It’s looking to open one in Chile next year.
