Northgate Technologies Ltd, a Hyderabad-based software products firm, said on Friday that it will be raising $26.50 million by way of preferential allotment to five foreign institutional investors.

Proceeds from the private placement will be used to expand Northgate’s operations, including the setting up of a server farm in Hong Kong, at an estimated cost of $6 million, the company’s chairman and managing directors Venkat S. Meenavalli said.

Mr. Meenavalli told reporters here that the board had approved the allotment of 24,47,062 equity shares of Rs10 each at a price of Rs 497.28 to the five FIIs,

The FIIs include USB Securities Asia Ltd, through its Mauritius subsidiary Swiss Finance Corporation, which will be allotted 6,33,700 shares. Macquarie Bank Ltd of Australia would also be allotted 6,33,700 share, while Copthall Mauritius Investments Ltd will be allotted 5,79,450 shares, India Capital Fund 4,61,700 shares and India Institutional Fund 1,35,512 shares.

The Northgate board on Friday had also decided to increase the authorised share capital of the company from Rs 18 crores to Rs 23 crores, Mr. Meenavalli said.

Mr. Meenavalli said Northgate, which has a substantial presence in the online advertising market, was also planning to enter the mobile Voice over Internet Protocol Space.