Camelot Information Systems IPO: Weak Start for a Promising Company

So far this year, Chinese companies have been big players in the IPO market in the U.S. However, some deals have struggled. Just look at today's offering from Camelot Information Systems (CIS), which provides information technology (IT) services.

The IPO had an initial price range of $11 to $13, and Camelot came in at the bottom of that range. In today's trading, the shares are off 4%. The company issued 13.3 million shares in all.

Despite all this, the fact remains that Camelot has a strong position in the Chinese IT market and is growing at a rapid clip.

A Look at Camelot

Yiming Ma and Heidi Chou founded Camelot back in the mid 1990s. More than just business partners, the two founders are married (interestingly enough, this is also the case with last week's IPO of Smart Technologies). Before starting the company, both Ma and Chou had worked at IBM (IBM).

No doubt, the experience paid off -- and they took it to China. With the surge in economic growth, Ma and Heidi saw a big opportunity to help companies implement IT systems.

For example, Camelot is now the largest provider of SAP (SAP) enterprise resource planning software in China. The company also has key relationships with companies like Hewlett-Packard (HPQ), Accenture (ACN) and, of course, IBM, which invested in Camelot in 2007.

The Big Picture


Over the years, Camelot has developed a highly flexible platform. At the core is a proprietary database of more than 9,000 qualified IT professionals. This enables Camelot to cost-effectively scale new projects.

As for the financials, the company has been a standout. From 2007 to 2009, revenues have gone from $51.4 million to $118 million. That's a compound annual growth rate of 51.5%.

But to continue growth, Camelot realizes it will need to ramp up acquisitions.The IT market is highly fragmented in China, with over 10,000 operators. As a public company with a fresh, new slug of cash, Camelot will be positioned to capitalize on the opportunities to consolidate.

And market is definitely large. According to IDC, the Chinese IT market was about $10.7 billion last year and is expected to reach $18.2 billion by 2013.

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