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| Hathway gets FIPB nod for more foreign equity |
| Ashish Sinha / New Delhi Nov 11, 2009, 01:06 IST |
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The Foreign Investment Promotion Board (FIPB) has approved a proposal from Hathway Cable & Datacom, a leading television cable distribution company, for bringing in foreign direct investments of Rs 16.65 crore after its proposed initial public offer (IPO).
Hathway’s proposal had sought the necessary clearances for increasing the foreign shareholding in the company from the existing 42.75 per cent to 42.99 per cent after its proposed IPO. The company will soon come out with an IPO for a fresh issue of 20 million equity shares of Rs 10 face value. The company is also aiming to generate funds from foreign investors in a pre-IPO placement, the details of which have not yet been finalised.
Currently, there is a 49 per cent cap on foreign direct investments in cable distribution companies. Hathway, in its proposal to FIPB, says it expects 60 per cent of the IPO to be subscribed by foreign shareholders and 40 per cent by Indian ones. As a result, post-IPO, the new foreign investors (individuals and companies together) may hold around 12 per cent in Hathway, while the shareholding of existing individual foreign investors (around five) will come down. Overall, post IPO, the foreign shareholders would hold nearly 43 per cent in Hathway, up from the current 42.75 per cent.
Hathway has also given an undertaking to FIPB that foreign shareholding in the company will not cross the mandated 49 per cent FDI cap applicable for the cable distribution sector.
The cable distribution market has recently witnessed some action, with DEN hitting the IPO market to mop up around Rs 400 crore.
There are over 85 million cable homes in the country and the various cable distributing companies have been looking for funds to upgrade the existing analogue cables into digital cables to compete with direct-to-home operators, and to give better cable television services to their consumers. Industry estimates suggest an immediate requirement of over Rs 2,000 crore for the various cable companies to upgrade their distribution network.
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