GTPL Hathway Pvt. Ltd, which counts top Indian cable operator by revenues Hathway Cable & Datacom Ltd as a key shareholder, has received the Securities and Exchange Board of India’s (SEBI) approval for an initial public offering (IPO).
The capital markets regulator issued final observations on the IPO proposal of the Gujarat-based multi-system operator on 12 May. GTPL Hathway became the 14th company to receive the regulator’s nod for a public issue in 2017.
The company had filed its draft prospectus on 4 January to facilitate a partial sale of shares by promoters and promoter group entities.
According to a banker familiar with GTPL’s plans, the overall issue size could be around Rs 600 crore. Accordingly, the company could be valued a little over Rs 3,000 crore.
An IPO and subsequent listing on stock exchanges will help GTPL Hathway become the second cable operator to go public in the past two years and, possibly, the most valued in the space.
Ortel Communications, which counts PE firm New Silk Route (NSR) as a shareholder, had a poor show in its IPO and barely managed to scrape past the target after NSR cut the number of shares it sought to sell in the IPO.
The firm had a tepid debut on the bourses but rose a few months later only to see investors lose interest soon after its stock price peaked in October 2015. Currently, it trades at a discount to the IPO price.
Ortel is trading at 34.73 times the price-to-earnings ratio based on the current stock price. Its market capitalisation is Rs 414 crore.
VCCircle first reported in August 2016 that GTPL had hired merchant bankers for an IPO.
The IPO comprises an offer for 18 million shares by promoters and shareholders as well as a fresh issue of shares worth Rs 300 crore ($45 million).
The firm will use Rs 229.66 crore of the proceeds to repay debt and the remaining for general corporate purposes.
GTPL Hathway has hired JM Financial Institutional Securities Ltd, BNP Paribas, Motilal Oswal Investment Advisors Pvt Ltd and Yes Securities (India) Ltd to manage the proposed public issue.
GTPL reported revenues (operations) of Rs 199.9 crore for the three months through June 2016. Its net profit for the period stood at Rs 8.41 crore, as per Indian Accounting Standards (Ind-AS).
For FY2015-16, it reported a consolidated loss of Rs 0.24 crore on revenues (operations) of Rs 738.44 crore.
Set up in 2006 by Aniruddhasinhji Jadeja and Kanaksinh Rana, the Ahmedabad-based company offers digital cable and broadband services. In 2008, R Raheja group-backed Hathway Cable and Datacom acquired a 50% stake in the privately held firm. Although the deal value was not disclosed, Hathway Cable is believed to have spent around Rs 125 crore to buy the stake.
GTPL’s IPO may affect financials of Hathway Cable. Around one-third of Hathway’s consolidated revenue comes from GTPL and group firms. With the IPO, Hathway Cable’s holding in GTPL is likely to shrink below the threshold where it can call it a subsidiary and its top line would fall.