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Photo Credit: Manmohan Shetty

Adlabs Entertainment opens IPO; Edelweiss’ hedge fund, MFs come as anchor investors

10 March, 2015

The initial public offer (IPO) of Manmohan Shetty-promoted Adlabs Entertainment Ltd, the firm behind theme park Adlabs Imagica, got off to a slow start with its issue seeing under 3 per cent subscription at the end of day 1.

The issue, which closes on March 12, saw zero participation from institutional investors on the first day with HNIs & corporates bidding for 7 per cent of their portion and retail investors pitching in with 15 per cent of the shares reserved for them, data compiled by the stock exchanges show.

Although the IPO still has two days to go, it sets a poor tone for the issue, especially after near casualty of a previous public issue. Last week, Ortel Communications had just managed to scrape through to the finishing line after its PE backer New Silk Route decided to cut the size of its own offer-for-sale as part of a larger issue.

Meanwhile, one day ahead of opening the IPO Adlabs Entertaiment raised Rs 60 crore (just under $10 million) from a bunch of anchor investors including a hedge fund under Edelweiss, besides a string of mutual funds under Axis, L&T Fin, HDFC AMC and a fund under Daiwa.

Forefront Alternative, a domestic hedge fund acquired by Edelweiss last year, brought in Rs 14.4 crore, two funds under Axis MF committed Rs 9.6 crore, two funds under L&T MF brought in Rs 15 crore and the rest came from funds under Daiwa and HDFC AMC.

Notably, the anchor investors have picked the shares at the lower end of the Rs 221-230 a share price band of the IPO.

Post the anchor investor allotment, the firm has now offered 17.6 million shares to the public.

The overall issue, including the anchor allotment portion, comprises 20.03 million shares of which around a tenth is through an offer for sale by the promoters.

Adlabs had earlier snipped the proposed size of the public issue after the pre-IPO placement. When it had filed its draft red herring prospectus last year it had said it plans to issue 23 million shares, including 2 million shares offered for sale by the promoters.

The firm sold a small stake to NYLIM Jacob Ballas India Holdings IV (NYLIM-JB) and Jacob Ballas Capital India Private Ltd (JBC), raising Rs 50 crore in the process.

This brought the second PE investor into its fold as the firm had earlier raised money from ICICI Venture in 2013.

Post conversion of convertible securities into shares, ICICI Venture now holds 16.95 per cent stake while NYLIM-JB owns 4.13 per cent and Jacob Ballas separately owns 0.22 per cent.

While ICICI Venture is sitting on unrealised gains of around 66 per cent on its investment, Jacob Ballas is potentially sitting on 23 per cent upside at the upper end of the price band.

The issue, which closes on March 12, is the second public float in 2015, after Ortel.

Adlabs was the first large company to file for a public float after the general elections last year, whose result is seen as positive for the primary market. Early last year another theme park and resorts operator Wonderla Holidays successfully completed its IPO and listed with gains on the bourses.

Adlabs is looking to raise the money to part repay its outstanding debt. The firm had availed of a consortium loan through the common loan agreement for capex towards the development of Adlabs Mumbai, which includes the theme park, the water park, the hotel and retail, dining and entertainment facilities besides repayment of short term loan from Syndicate Bank for the development of the same project.

Its flagship property Adlabs Imagica is a theme park located in Khopoli in the Mumbai-Pune expressway and was opened in April last year. Spread over 300 acres, the theme park has around 21 rides at present and the firm is expanding the project.

It will also include a water park and a three-star/family hotel which will be operational in early 2015. The park can accommodate about 20,000 visitors daily and aims to host over 3 million visitors in the first year of operations.

Its promoter Manmohan Shetty is better known as the founder of Adlabs Films Ltd, which was acquired by Reliance Group (earlier Reliance ADAG) and is now renamed as Reliance Mediaworks Ltd. He ventured into the theme park business after selling the previous firm.

His group includes Walkwater Media Ltd (WML) which is engaged in the business of film and television content production as well as seeding promising ventures within the media and entertainment space. It has produced/co-produced movies like Tere Bin Laden and Rajneeti. Other ventures seeded by the group include Scrabble Entertainment, which was later acquired by UFO Moviez.

Adlabs Entertainment’s issue is being managed by Deutsche Equities, Centrum Capital and Kotak Mahindra Capital.

(Edited by Joby Puthuparampil Johnson)


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Adlabs Entertainment opens IPO; Edelweiss’ hedge fund, MFs come as anchor investors

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