GTPL Hathway Pvt. Ltd, which counts Hathway Cable & Datacom Ltd as a key shareholder, is seeking a valuation of Rs 1,915 crore ($300 million) for its initial public offering beginning next week.
On Wednesday, GTPL set a price band of Rs 167-170 per share for the IPO, which will open on 21 June and close two days later. The anchor book will open on 20 June, one business day before it opens to the public.
Anchor investors are institutional investors who accept a one-month lock-in period for a sizeable allocation of shares to support a public offering.
The IPO will comprise a fresh issue of shares worth Rs 240 crore, besides the sale of 14.4 million shares by the promoters and existing shareholders worth Rs 245 crore.
At the upper end of the price band, the company is expected to sell about 28.6 million shares, which will result in a stake dilution of 26% on post-issue basis.
The Gujarat-based multi-system operator will use Rs 228.93 crore of the net proceeds to repay debt and the remaining for general corporate purposes.
GTPL had filed its draft red herring prospectus with the Securitie and Exchange Board of India on 3 January. It received the nod from the capital markets regulator for the IPO on 12 May.
The planned issue size is smaller than the Rs 300 crore and the 18 million-secondary sale that GTPL had announced in the draft proposal.
VCCircle had first reported in August 2016 that GTPL had hired merchant bankers for an IPO of Rs 400-500 crore. It had hired JM Financial Institutional Securities Ltd, BNP Paribas, Motilal Oswal Investment Advisors Pvt Ltd and Yes Securities (India) Ltd to manage the public issue.
GTPL Hathway will become the second cable operator to go public in recent times and, possibly, the most valued.
Ortel Communications, which counts New Silk Route as a shareholder, had a poor show in its IPO and barely managed to scrape past the target after the private equity firm 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 the stock price peaked in October 2015. Currently, it trades at a discount to the IPO price.
Ortel is trading at 16.67 times the price-to-earnings ratio based on the current stock price. Its market capitalisation is Rs 198.10 crore.
GTPL had reported revenues of Rs 651.9 crore for the nine months through December 2016. Its net profit for the period stood at Rs 16.3 crore, according to Indian Accounting Standards.
For 2015-16, it had reported a consolidated profit of Rs 4.59 crore on revenues 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, the R Raheja group-backed Hathway Cable and Datacom had acquired a 50% stake in the privately held firm. Although the deal value was not disclosed, Hathway Cable is believed to have put in Rs 125 crore for the stake.
GTPL’s IPO may also affect the 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 to call it a subsidiary. This may result in a fall to its top line.
For more details on the GTPL IPO, click here.
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