Citigroup Venture Capital (CVC)-backed cable broadband service provider You Broadband & Cable India Ltd is looking to raise Rs 360 crore through its public float. One of the few Indian companies in which CVC has a majority stake (others include names like Sharekhan), You Broadband also counts amongst its investors names like media house BCCL, Tanti family (of Suzlon) and financial services firm Edelweiss Capital (who is also managing the issue).
CVC owns over 82% in You Broadband. Originally owned by British Gas, the company was acquired by CVC-backed Mauritius company in 2006 and is estimated that it has already pumped in over Rs 300 crore through a string of fresh issues and allotments against amalgamations.
The exact quantum of investment made by BCCL, which strikes ad-for-equity deals and holds 4.4% stake pre IPO, could not be ascertained, the company has commitments to advertise in BCCL media vehicles to the tune of Rs 22.37 crore which is valid for four years ending November’10. Edelweiss Capital had picked a small stake worth Rs 2.5 crore at Rs 13.7/ share in November’08.
Another group of investors comprises members of the Tanti family who together own around 4.45%. They were allotted shares as a part of an inorganic expansion deal where You Broadband acquired 36.24% in a cable TV company Digital Outsourcing Private Ltd that was owned by the Tantis. This cable company operates in 10 cities in India, including Mumbai – Navi Mumbai, Bangalore, Vishakapatam, and Nagpur. Of these 10 cities, four cities, namely Mumbai, Navi Mumbai, Bangalore and Vishakapatnam, overlap with the cable broadband services footprint and network infrastructure of You Broadband.
The company had an agreement entitling it to buy another 12.75% provided it allots 4.425% to the Tantis, which it has done. Further, You also has rights to purchase another 13.29% of the cable company for Rs 12.8 crore (valuing it at Rs 96 crore) within two months of completing the issue of shares. As of February 28, 2010, DOPL offered its services to an estimated 1.5 million homes through cable operators and approximately 8,000 direct residential subscribers.
You Broadband plans to use little less than half of the issue money for expanding broadband business. Rest of the money is intended to be used for acquiring the additional stake(13.29%) in the cable company besides hardware for the cable firm, working capital expenses etc.
For the year ended March’09, it had total income of Rs 79 crore with net loss of Rs 15.9 crore. It reduced its capital and adjusted it to balance the outstanding losses of the company(Rs 168 crore) during, possibly to clean balance sheet ahead of the IPO. For the period ended September’09, its total income stood at Rs 37.6 crore with net loss of Rs 9 crore.