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Tuesday, November 14, 2006

Raj TV Network plans to raise Rs 1 bn through IPO

Raj Television Network plans to raise Rs 1 billion through its initial public offering, IPO. The issue proceeds will be used for launching a niche youth channel, producing telefilms, distribution of TV channels in overseas markets, creating a studio facility, strengthening existing content, and exporting films, reports Indiantelevision.com.

Post-IPO, the promoters' holding will drop from 100% to 72.5%. The IPO will consist of a fresh issue of 22,70,700 shares (15%) and an offer for sale of 12,97,550 shares (10%). Raj TV Network is also reserving 2.5% as ESOPs.

"We expect to raise Rs 1 billion. The final value will, however, be determined through the book building process," Raj TV Network senior vice president, corporate planning and strategy Sathya Prakash said.

The company has earmarked Rs 106 million for launching a niche channel aimed at the youth while Rs 71.5 million will be for the studio and Rs 62.5 million towards telefilms. For beefing up content, Raj TV plans to spend Rs 90 million, Rs 50 million for export of films and Rs 37.5 million for distribution of TV channels in overseas markets.

"We plan to produce five telefilms a year which could also be released on multiplexes. We will be launching our channels internationally. These channels will have a component of local content in each of the markets," says Prakash.

Raj Television Network has already filed the draft red herring prospectus with the Securities and Exchange Board of India, Sebi to enter the capital market with an offer of 35,68,250 equity shares of face value of Rs 10 each. The book running lead manager to the issue is Vivro Financial Services.

The company, which operates Tamil channels Raj TV and Raj Digital Plus, posted a revenue of Rs 320 million during 2005-06 fiscal and Rs 92 million for the first quarter ended 30 June 2006. Pay-TV revenue accounts for 30-35 per cent of the company's total earnings, says Prakash.

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