Manmohan Shetty-promoted Adlabs Entertainment Ltd, the firm behind theme park Adlabs Imagica, has filed its draft red herring prospectus with SEBI to raise over Rs 400 crore ($68 million) through an initial public offer.
This marks the first large company to file for a public float after the elections, whose result is seen as positive for the primary market. Early this month another theme park and resorts operator Wonderla Holidays successfully completed its IPO and listed with gains on the bourses.
Adlabs Entertainment is looking to raise the money to part repay its outstanding debt. The firm had availed of consortium loan through the common loan agreement for capex towards the development of Adlabs Mumbai, which includes the theme park, the water park, the hotel and retail, dining and entertainment facilities besides repayment of short term loan from Syndicate Bank for the development of the same project.
The amount sanctioned under the consortium loan aggregated Rs 1,100 crore as on March 31, 2014 of which Rs 944.1 crore is outstanding at the end of FY14.
The firm is looking to issue 23 million shares including 2 million shares offered for sale by the promoters.
It said it is also considering a pre-IPO placement of up to 3 million shares for up to Rs 80 crore.
Given that SEBI norms mandate that a company cannot allocate more than 25 per cent of the issue proceeds under ‘general corporate purposes’, Adlabs Entertainment could be looking to raise anywhere between Rs 400 crore to Rs 533 crore. This would mean price per share in the range of Rs 190-254 a unit.
The firm had previously raised funding from ICICI Venture at Rs 220 a share. In a deal struck last August ICICI Venture through its India Advantage Fund agreed to invest around Rs 144 crore through a mix of shares and compulsorily convertible debentures (CCDs). The proceeds of this investment were proposed to be used for capital expenditure for setting up of the theme park, water park, hotel, retail, dining and entertainment. The CCDs are not yet converted into shares.
Adlabs Entertainment clocked revenues of Rs 65.9 crore with net loss of Rs 22.3 crore for the nine month period ended December 31, 2013.
Its flagship property Adlabs Imagica is a theme park located in Khopoli in the Mumbai-Pune expressway and was opened in April this year. Spread over 300 acres, the theme park has around 21 rides at present and the firm is expanding the project.
It will also include a water park and a three-star/family hotel which will be operational in early 2015. The park can accommodate about 20,000 visitors daily and aims to host over 3 million visitors in the first year of operations.
Its promoter Manmohan Shetty is better known as the founder of Adlabs Films Ltd, which was acquired by Reliance Group (earlier Reliance ADAG) and is now renamed as Reliance Mediaworks Ltd. He ventured into the theme park business after selling the previous firm.
His group includes Walkwater Media Ltd (WML) which is engaged in the business of film and television content production as well as seeding promising ventures within the media & entertainment space. It has produced/co-produced movies like Tere Bin Laden and Rajneeti. Other ventures seeded by the group include Scrabble Entertainment, which was later acquired by UFO Moviez.
Adlabs Entertainment’s proposed issue is being managed by Deutsche Equities, Centrum Capital and Kotak Mahindra Capital.