STAR has sold its stake in content company UTV, said to be close to 16%, to UTV's founder and principal shareholder Ronnie Screwvala. Simultaneously, Canadian pension fund CDPQ has shed a little over one-third of its 31% holding in the company, also in favour of Mr Screwvala. This would imply a payout of around Rs 50-55 crore to the two shareholders to the UTV promoter for increasing his holding to 54% in the company.
While Mr Screwvala was tight-lipped about the price of the shares, industry sources confirmed the 3.6 million shares with CDPQ had a buy-back price of Rs 65 per share, while STAR is said to have sold its stake of 4.5 million shares in the price band of Rs 70-90 per share.
Speaking to ET, Mr Screwvala said that he had exercised his buy-back option to increase his holding in the company to 54% ahead of UTV's IPO. He said he would be filing his prospectus with Sebi in three weeks time, and aimed to go to the market sometime between September and November, this year.
CDPQ had taken a 31% stake in UTV two-and-a-half years ago equivalent to 9.6 million shares. As part of its down-sizing of investments in Asia, the pension fund had signed an agreement to sell 3.6 million shares, Mr Screwvala said. The IPO will also serve as an exit route and the balance 6 million shares will be offered for sale in the forthcoming IPO. Mr Peter Mukerjea, CEO of STAR India said STAR wanted to pull out from the content company as "we are not getting the value for our investment." He said good content was available from multiple sources and STAR's programming department had made it known that it should not be tied down to monopolistic agreements.
STAR, when headed by Andrew Carnegie in 1994, wanted to set up its own content company in India but then later opted for a 49% stake in UTV with around Rs 15 crore investment. With expanded equity capital coming in, STAR's share declined to 30%.
This further came down to 17% after the UTV promoters bought back 13% of STAR's stake.
UTV's IPO will offer 6 million shares as fresh equity and an additional 6 million shares belonging to CDPQ. The promoters expect to raise around Rs 120 crore through the IPO. Enam have been appointed as lead managers for the issue.
UTV has made efforts to go public in the past but adverse market conditions had frustrated the promoters' plans. After initial moves in 1999, the company had also filed a prospectus in March 2000. The proposed IPO had to be withdrawn after the stock market crash following payment problems triggered by stockbroker Ketan Parikh.
Besides television programming, UTV has business projects in film production as well as broadcasting. The company has recently co-produced 'Lakshya' and holds a 45% stake in Vijay TV along with majority partner STAR. It has also in the process of launching a TV channel Hungama TV.
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