Digital cinema solutions firm UFO Moviez has filed its draft red herring prospectus (DRHP) to raise up to Rs 750 crore ($118 million) through an initial public offer (IPO) which would see both its private equity backers sell shares in the offer for sale issue.
The firm, a part of Kanwars-led Apollo Group which makes tyres and is into logistics among other businesses, counts PE firms 3i and Providence as shareholders. Providence, which invested in the company in 2011, is the
single-largest shareholder, while 3i, which backed UFO Moviez in 2007, is the second largest equity holder in the firm.
While Providence is expected to part exit, it is not yet clear how much stake is 3i paring in the IPO. It had originally invested way back in 2007.
Here's a snapshot of the proposed IPO:
* Offer for sale issue size at Rs 750 crore.
* Sellers include 3i, Providence, promoters and certain employees.
* Bankers: Axis Capital and Citigroup
* UFO Moviez is India’s largest digital cinema distribution network and in-cinema advertising platform (in terms of numbers of screens), according to CRISIL. It operates a satellite-based, digital cinema distribution network.
* It is co-promoted by Sanjay Gaekwad, Narendra Hete and Apollo International.
* In fiscal year 2014, it digitally delivered more than 1,500 movies in 22 languages to 4,703 screens with aggregate seating capacity of approximately 2.14 million viewers spread across India. As at October 31, 2014, its global network spans 6,611 screens, including 4,912 screens across India and 1,699 screens across Nepal, the Middle East, Israel, Mexico and the US.
* According to CRISIL, it has an overall 54 per cent market share in India’s digital cinema exhibition industry in terms of screens that use digital cinema distribution networks.
* It also has created a pan-India, in-cinema advertising platform with generally long-term advertising rights to 3,767 screens, with an aggregate seating capacity of approximately 1.86 million viewers and a reach of over 1,800 locations across India, as at October 31, 2014. It has been able to attract 1,056 advertisers from private and government sectors in fiscal year 2014, compared with 563 advertisers in fiscal year 2013.
* It is consolidating the business with certain other group firms and has entered into an investment agreement with promoters to buy 80 per cent stake in Valuable Digital Screens Pvt Ltd (VDSPL) for over Rs 4.4 crore. It will buy the remaining 20 per cent stake thereafter.
* VDSPL is an India-based business that has two primary operations: Club Cinema and Caravan Cinema. The ‘Club Cinema’ business provides digital screening of movies in clubs and community centres at private screens, such as remote industrial townships, corporate auditoriums, educational institutions and other leisure and entertainment complexes. The ‘Caravan Cinema’ business provides movie screenings with low capital expenditures in targeted rural areas. Currently, movies are screened free to viewers and Caravan Cinema derives its revenues through advertising.
* Its revenues flow from advertisers, through in-cinema advertising; movie producers and distributors, for the secured delivery and screening of their movies and exhibitors, through equipment rental and sales for digital cinema equipment.
* In FY14, revenue from distributors accounted for half of total revenues; exhibitors, which include lease rental income and sales of products (including lamps and digital cinema equipment), accounted for 23.18 per cent of revenues; and advertisers, which include advertisement revenue (primarily from in-cinema advertising), accounted for around 23.72 per cent of revenues.
* Its consolidated total revenues increased from Rs 207.6 crore in FY12 to Rs 421.1 crore in FY14, representing a compound annual growth rate of 42.4 per cent. Its EBITDA increased from Rs 52.3 crore to Rs 131.7 crore and net profit soared from Rs 4.36 crore to Rs 46.5 crore in the same period.
* For the six months ended September 30, 2014, its consolidated revenue was Rs 233 crore and net profit was Rs 21 crore.
TMT focused PE firm Providence had invested around Rs 271 crore—a little over half of this was a through primary issue while the rest was through purchase of shares from existing shareholders, including 3i and others in 2011. Given its 35.73 per cent shareholding, it had valued UFO Moviez at around Rs 760 crore.
3i owns 21.5 per cent of the firm having part exited three years ago when it pulled out Rs 50 crore by selling shares to Providence. It had originally invested $22 million in 2007.
For Providence this would come as second liquidity event from its India portfolio after part exiting Idea Cellular in September.
(Edited by Joby Puthuparampil Johnson)