Dhoot family-promoted Bharat Business Channel Ltd, which runs direct-to-home television service under the Videocon d2H brand, has filed its documents with market regulator SEBI to raise up to Rs 700 crore ($128 million) via IPO.

Assuming the promoters would dilute 25 per cent stake in the IPO to meet the minimum public listing norms, the firm would be valued at Rs 2,800 crore. However, in its documents filed with SEBI, the firm has indicated that it is looking to raise up to Rs 50 crore at a price which could value it much higher.

The last equity issue of the firm was at a similar price point of Rs 50 a share in its rights issue, in which promoters put in fresh money into the firm. If the IPO is priced at around the same level, it would lead to around 36 per cent equity dilution, valuing the firm at around Rs 1,900 crore.

Bharat Business Channel, which commenced DTH operations in July 2009, has grown its subscriber base from 0.44 million gross subscribers as of March 31, 2010, representing around 2 per cent of the total DTH subscriber base in India, to 6.62 million gross subscribers as of September 30, 2012, which is approximately 13 per cent of the total DTH subscriber base in the country.

For the six months ended September 2012, the firm had total revenues of Rs 493 crore with net loss of Rs 270 crore. The firm had clocked net loss of Rs 1,140 crore in the three previous financial years and had a negative net worth of Rs 589.8 crore as of September 30, 2012.

A slew of DTH services providers are PE-backed companies, including the top two players – Dish TV (Apollo Management) and Tata Sky (Temasek).

The digitisation move, which has made it mandatory for existing cable TV homes to switch to digital signal across India over a period of time, is expected to benefit both digital cable players such as PE-backed DEN Networks, as well as DTH firms.

Enam Securities (Axis Capital) and UBS are the joint global co-ordinators and book running lead managers (BRLMs) to the issue. IDBI Capital, SBI Capital and Yes Bank are the other three BRLMs.

(Edited by Sanghamitra Mandal)

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