After raising funds from Providence Equity Partners last month, cable operator Hathway Cable & Datacom Ltd is mopping up another Rs 100 crore or $15 million from three foreign institutional investors (FIIs). The company is selling around a 2.4 per cent stake to these investors, according to VCCircle estimates.
The buyers in this round of funding are Steadview Capital Mauritius, LTR Focus Fund and Massachusetts Institute of Technology. The three investors are collectively picking up 3.52 million shares at Rs 284 per unit. Ambit was the advisor on the transaction.
Hathway’s scrip was trading at Rs 265 at 11:18 am, up 1.16 per cent on BSE in a strong Mumbai market on Thursday. This gives the firm a market capitalisation of Rs 3,794.8 crore.
In another recent deal in the cable TV segment DEN Networks Ltd raised $110 million from an arm of Goldman Sachs.
“This industry is attracting capital firstly because it needs it as it is moving from analogue to digital. The cable industry didn’t attract interest from investors earlier because of leakage and non-addressable market where operators did not have information on consumer usage. With set top boxes (STBs), we now have a subscriber management system with MSOs which brings in transparency in the market in terms of revenue share that investors need,” said Jagat Dave, managing director at Ambit Corporate Finance.
Dave believes that investments in the sector will continue as capex requirements will persist over 24-30 months.
Last month, Providence infused Rs 150 crore in Hathway along with the promoter Raheja Group and the current fundraise is part of the same round. Providence, a media and technology focused PE major, now owns 12.6 per cent stake in the company.
Other existing investors in the cable operator include KAUP Capital’s Infrastructure India Holding Fund, which holds 3.9 per cent, besides Norway’s sovereign wealth fund Government Pension Fund Global and hedge funds such as Tree Line Asia and Route One.
Hathway reported a 11.9 per cent increase in revenues to Rs 1,132.5 crore with profit after tax of Rs 40.6 crore in FY13 against a loss of Rs 39 crore the previous fiscal.
“Hathway is the best placed MSO to capitalise on the huge digitisation opportunity. Its subscription revenues are bound to increase in FY14 due to Phase 1 and partly due to Phase 2. Currently, the stock is trading at EV/EBITDA of 16.2x and 13.2x FY14E and FY15E, respectively,” said an Edelweiss Securities report last month with a target price of Rs 347.
(Edited by Joby Puthuparampil Johnson)