Leverage buyout specialist Apollo Management has picked 11% stake in Dish TV, the country’s largest direct-to-home (DTH) operator for $100 million (Rs 465 crore) through global depository receipts (GDR). The deal values Dish TV at Rs 4,603 crore ($990 million).

The funds are likely to be used to expand operations and for customer acquisitions. DTH companies incur costs to add new subscribers to their fold as they subsidise the cost of equipment that is sold to every subscriber (below cost). DTH operators incur this initial cost to acquire new subscribers in the hope that, over a period of time, the consumer will bring cash through payment of subscription fees.

The deal has been struck at a price of Rs 39.8/share against the closing price of Dish TV at Rs 40.75 on the NSE on Monday. The share price has risen over three times after hitting an all-time low of Rs 11.75 in October 2008. With the equity dilution, the total promoter holding in Dish TV will come down to 64.8% from 72.8% as of September end.

Dish TV had early this year disclosed that it plans to raise as much as $200 million through FCCB/GDR. The company has not said whether it is going to raise the balance amount in the next few months. Given that promoter holding is at a comfortable level it could be looking at an upside in valuation in the next few months before going ahead with another issue which could, take the form of an FCCB.

New York-based Apollo Management, which has assets in excess of $50 billion under management, had last year opened an India office and had brought in Mintoo Bhandari (a partner at the UK unit) to head the operations.

Apollo Management's real estate investment arm, Apollo Real Estate Advisors, already runs a $650-million real estate private equity fund in India in partnership with Delhi-based Khemka family's SUN group.

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