ExlService shares soar 39 percent in debut
NEW YORK, Oct 20 (Reuters) - Boosted by strong growth prospects for offshore outsourcing firms, shares of ExlService Holdings Inc. (EXLS.O: Quote, Profile, Research) surged more than 39 percent in their market debut on Friday.

The stock opened up 18 percent at $15.95 on the Nasdaq before climbing as high as $18.83. It later retreated to $18.23.

On Thursday, the 5-million-share initial public offering from ExlService raised $67.5 million after selling for a higher-than-expected $13.50 per share, compared with a $10 to $12 forecast.

The pricing gave the company an initial market capitalization of more than $371 million.

The New York-based company provides offshore business process outsourcing services, primarily in India, for the banking, financial services and insurance sectors.

Growth prospects for the company and other offshore outsourcing companies drove the immediate rise in share prices, said Francis Gaskins, president of IPO Desktop, an independent research firm based in Los Angeles.

At a share price of $17.35, the company would trade at 122 times annualized earnings, Gaskins said, adding that despite the high multiple, the company presents a strong business model.

"They are in a high-growth business, they have shown the ability to get new clients, and they have broadened their product line," Gaskins said. "Investors are hungry for companies in rapidly growing markets

ExlService executives also attributed the company's IPO success to growth prospects for their market and said the immediate gains are a testament too to their position within the industry.

"All of this is a reflection of the market space that we are in and our leadership position within the banking, financial services and insurance domain," said Rohit Kapoor, ExlService president and chief financial officer.

Vikram Talwar, vice chairman and chief executive officer, added that as the number of companies that pursue offshore outsourcing rises, the company's reputation as a leader in the market grows with it.

ExlService plans to use proceeds from its offering to repay debt and as working capital.

Citigroup and Goldman Sachs & Co. were the lead underwriters.

Other outsourcing companies have performed well in their initial public offerings.

In July, India's WNS Holdings Ltd. (WNS.N: Quote, Profile, Research) raised $224 million with an offering of 11.2 million American Depositary Shares that sold for $20 each, the top of a forecast range.

Each ADS represents one ordinary share of the company, which provides offshore business process outsourcing in the travel, hospitality and finance industries.

Shares of the Mumbai-based company soared in its debut and traded at $28.09 on Friday, up 17 cents, on the New York Stock Exchange. At $27.90, the company would trade at 54 times annualized earnings.