New Delhi : Videocon D2H, the direct-to-home service provider arm of $10-billion Videocon Group, has entered into an agreement with Silver Eagle Acquisition Corp (SEAC), under which the US-based special purpose acquisition company will invest $300 million for about 33.5% stake, valuing the company at $900 million.
According to people aware of the details, the transaction has been done through American Depository Receipts, bought and sold on American markets just like regular stocks, through which Videocon D2H will get listed on Nasdaq. The people added that SEAC’s minority stake acquisition will allow American company’s chief executive Harry Sloan and president Jeff Sagansky to come on the board of Videocon D2H. The agreement between the companies was closed on December 31, 2014.
The investment proceeds will be used for reducing debt and expanding operations in India that will undergo the third and fourth phases of cable television digitisation by 2016-end, offering large growth opportunities.
Including debt of Rs 2,000 crore, the company’s enterprise valuation could touch $1.2 billion, sources added. Videocon Industries CMD Venugopal Dhoot was not immediately available for comment. The Dhoot family fully owns Videocon D2H.
Videocon D2H is also set to raise additional funds of $115 million (Rs 700 crore) through an initial public offer in India, for which it received approval from the markets regulator in October 2014, after having got prior approvals in December 2012 and March 2013. Axis Capital, Edelweiss, ICICI Securities, IDBI Capital, UBS, SBI Capital Markets and Yes Bank have been appointed as joint book runners.
Most of the proceeds from this Initial Public Offering ( IPO) will be used for buying standard definition and high definition settop boxes, outdoor units, repaying debt, working capital requirements, capex and brand building exercises.
The Mumbai-based company commenced operations in July 2009. As of September 30, 2014, it has gross subscriber base of 11.8 million and market share of 16.5% in India, a top executive shared. For fiscal 2014 and the six months ended September 30, 2014, Videocon D2H had 27.7% and 26.1%, respectively, of the incremental market share of the DTH subscriber base in India.
Videocon D2H competes with its listed peer and market leader Dish TV besides half a dozen national service providers, including Airtel Digital TV, Tata Sky, Reliance Digital TV and Sun Direct, in a fast growing market.
The company distributes over 500 digital television channels and other video and audio services to subscribers via direct satellite feeds. For the year ended March 31, 2014, it reported total income ofRs 1,760.8 crore, up from Rs 1,120.5 crore the year before and marginally narrowed losses to Rs 469.4 crore from Rs 515.1 crore in the same time. For the quarter ended June 30, 2014, it posted revenues of Rs 537.7 crore and Rs 78.1 crore as net loss.