Eros International’s big IPO dreams get smaller

Mumbai: A big name in film distribution in the UK market, Eros International, a media and entertainment group of companies has faced a set back even before starting their new ambitious venture.

Eros was planning to raise money to set up a digital cinema exhibition business in India, besides entering new media such as online, cable, wireless and mobile. But, they have been forced to slash its floatation price as it seeks entry to the AIM (Alternative Investment Market) market this week.

They had initially planned a $ 100 million IPO on AIM, London to fund their new media plans. This would have given them a market capitalisation of over $ 500 million. But now Eros has decided to cut the number of shares on offer to investors and raise as little as $40 million in a move that will value the company at around $350 million. The reduced take-up of its shares could hurt its acquisition strategy in the future. The reason behind this alteration seems to be Evolution, the company’s financial advisor. They have advised the board of Eros that a faltering market of IPOs in the AIM has made the fundraising process significantly harder.

Almost 30 years in the business of owning, creating and globally distributing Bollywood content in a variety of formats, Eros also dominates the UK market of Bollywood film distribution by having a 40 per cent market share. In the last nine months of last year, Eros International has made a profit before tax, interest and goodwill of $12.6 million. Turnover was about $32.2 million. It is predicting annual sales of about $44 million this year.

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