Ortel to open IPO on March 3; NSR now seeks part-exit with around 2x returns

By TEAM VCC

  • 24 Feb 2015

Regional cable TV and broadband distribution firm Ortel Communications Ltd has fixed the price band of its proposed initial public offer (IPO) at Rs 181-200 a share, which would allow it to raise up to Rs 120 crore in the issue.

The public issue which opens on March 3 would be the first to test the primary market appetite this year. At the fag-end of last year, edible oil firm NCML's issue was withdrawn after it failed to attract investors. Monte Carlo Fashions was the last one to clear the rope two months ago.

Interestingly, private equity firm New Silk Route (NSR), which was initially looking to part exit but had offered to sell its entire holding when Ortel filed its draft red herring prospectus (DRHP) last September, has now again changed its plan. It has now offered to sell around three-fourth of its holding as part of an offer for sale which would fetch it Rs 108.6-120 crore, the same as the company.

This means the overall issue size has now shrunk to Rs 217.2-240 crore.

Kotak Mahindra Capital is managing the issue.

Ortel had previously looked at a public float around five years ago, when NSR was looking to exit completely. However, it did not go ahead with the IPO due to poor market conditions. In 2013 it had re-filed its documents but later withdrew it.

Based out of Odisha, Ortel is promoted by the family of businessman-turned-MP from Biju Janata Dal, Jay Panda.

Although NSR would double its investment value, given the long holding period it would pocket a modest internal rate of return (IRR) of 11-12 per cent, as per VCCircle estimates.

It would mark its debut exit from a portfolio in India and could be the first of a string of such liquidity moves. Another of its portfolio firms VRL Logistics recently got the final clearance for its own IPO where NSR is part-exiting.

Early this month, Carlyle got a green signal from India's competition watchdog Competition Commission of India (CCI) to execute its first major buyout in India by inking a deal to buy bulk of the business of NSR-controlled financial services firm Destimoney.

Ortel would become the fifth firm to go public since the new government took over last May. Earlier, Sharda Cropchem, Snowman Logistics, Shemaroo Entertainment and Monte Carlo saw through their successful public issues.

Of these five, barring Shemaroo, all the rest are PE backed firms. Sharda Cropchem and Snowman Logistics that were off the blocks ahead of others saw bumper oversubscription and their share prices have flared. Monte Carlo was also oversubscribed but has struggled to even match up to its issue price post listing.

Click here for more information on the IPO.

(Edited by Joby Puthuparampil Johnson)