Den May Induct Anchor Investor In IPO

By Pallavi S

  • 26 Oct 2009

PE-backed cable television operator Den Networks is looking to raise up to Rs 410 crore ($ 88 million) through its initial public offer (IPO). The firm has fixed a price band of Rs 195-205 per share for the issue comprising fresh issue of 20 million shares. The issue that opens for subscription on October 28 (Wednesday) will value the firm at Rs 2,704 crore ($580 million).

Den is likely to induct an anchor investor in the issue which would be the third investor group to put in money in the firm. Den has so far raised Rs 200 crore in two tranches from funds managed by IL&FS Investment Managers (IIML). IIML, which invested through Standard Chartered IL&FS Asia Growth Fund and TARA India Fund, will hold around a 10% stake post issue.

More recently, Den had raised another Rs 75 crore from EMSAF Mauritius, part of the $10-billion Emerging Markets Management LLC, in July this year. This deal valued Den at Rs 2,125 crore.


Promoted by Sameer Manchanda, former finance head of NDTV who went on to co-found CNN-IBN newsgroup and still holds shares in the firm, Den will become the most valued cable service provider in the country ahead of Zee group owned Wire & Wireless India Ltd(WWIL) which currently has a market cap of Rs 900 crore.

But it could be pegged a rank below Hathway which is also coming with an IPO and although it is yet to firm up its issue price, it could be eyeing a valuation closer to Rs 3,000 crore. Manchanda would be looking to be third time lucky after having seen through two IPOs of NDTV and GBN (now IBN18).

Den had consolidated revenues of Rs 719 crore for the year ended March’09 with net loss of Rs 15 crore but clocked net profit of Rs 3.2 crore with top line of Rs 214 crore for the quarter ended June 2009. Compared to this, WWIL had revenues of Rs 63 crore with net loss of Rs 46 crore for the same quarter.


The valuation of both companies appears to be in based on their revenues, 3-3.5 times top line. On this basis, Den is priced marginally at a discount to WWIL. Den is also valued at a discount to Dish TV, the DTH service operator which is in a similar space but has a different technology. Dish TV has similar revenues to Den but is much deeper into the red with consolidated net loss of Rs 480 crore for the year ended March’09.

Deutsche Equities India and Antique Capital are managing the Den issue.

The company, that started its operations in 2007 and has followed a strategy of acquiring small cable players across India, claims to reach more than 10 million homes in the country.



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