Less than a week before Australian IT outsourcing company Kaz Computer Services' IPO, managing director Peter Kazacos says many pureplay Internet company stocks are "grossly" overvalued.
In fact, according to Kazacos, less than 1 per cent of his company's revenues for the last financial year were generated through "Internet activity".
KCS's IPO will open on February 14. The company will offer 80 million shares, valued at $1 per share.
Kazacos said 73 per cent of the company's revenues for this financial year were already secured, as were 54 per cent of next year's. All KCS outsourcing projects were paid for in fixed monthly payments over periods of three to six years, he said.
Kazacos competes with IBM GSA, EDS and CSC in the outsourcing market for mid-range businesses. With the money raised from the float, he believes KCS will have a good chance of winning the outsourcing contract recently tendered by Westpac. "You'd need at least a million to go after that."
Kazacos said his company would also attempt to further its penetration into the Asian outsourcing market. As a result of the company's joint venture with Vanda Group, KCS already had considerable presence in Singapore, Malaysia and Hong Kong, he said.
The company would also use the financial resources to pursue local government outsourcing contracts, he said.
KCS includes AMP, Westpac and McDonalds in its current clients.