Shemaroo's Rs 120 cr IPO to open on September 16

The equity shares are being offered in the price band of Rs. 155-170/share at face value of Rs 10 each

Raman Maroo and Atul Maru promoted Shemaroo Entertainment Limited will be entering the capital market with an initial public offering (IPO) from 16 to 18 September. The company aims to raise Rs 120 crore through the exercise. The equity shares are being offered in the price band of Rs. 155 to Rs. 170 per equity share of face value of Rs. 10 each.

The floor price is 15.5 times the face value and the cap price is 17.0 times of the face value. Bids can be made for a minimum of 85 equity shares and in multiples of 85 equity shares there after.

Currently, the promoters have 90% shareholding and this is expected to come down to 64% post the IPO. Shemaroo has offered a 10% discount to retail subscribers. Of the total shares offered, 60% will be offered to qualified institutional buyers (QIBs). Besides, the firm isconsidering a "pre-IPO placement up to eight lakh equity shares aggregating up to Rs 10 crore".

Of the total money Shemaroo targets toraise from the exercise, Rs 106 crore will be used as working captial which will include expanding the library of movies with the companyand enhancing the monetisation strategies on broadcast syndication ofmovies and digital. The rest of the money will be used for regularcorporate exercises, informs the company.

Shemaroo was started in 1962 as a book lending outfit and later converted into a home video business. Overthe years, the company acquired perpetual and aggregator rights tovarious movies across Bollywood and regional cinema. Perpetual rightsrest with a company for posterity while aggregator rights arerestricted by duration, platform and/or location.

The company's revenues for the yearended March 31 2014 stood at Rs 265.95 crore and profit after taxstood at Rs 27.14 crore, according to information filed by theocmpany in the Red Herring Prospectus.

More than 50% Shemaroo's revenue comes from the broadcast syndication of the 2900 titles itcurrently owns, nearly 700 of which are perpetual titles. The rest of the revenue comes from other revenue streams like digital, overseasdistribution and in flight entertainment. In case of digital, the company has entered an agreement with Google Inc's video streaming platform YouTube as the official channel partner and operates 32 channels under the deal. Apart from this, the company also haspartnerships with telecom companies like Airtel for mobile value added services.

Yes Bank Limited and ICICI Securities Limited are the book running lead managers to the Issue.