Know why Tata Sky has shelved its IPO plans and is instead turning to PE firms to raise Rs 1,800 cr

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Know why Tata Sky has shelved its IPO plans and is instead turning to PE firms to raise Rs 1,800 cr
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If you have been planning to buy shares from Tata Sky, this might be quite disheartening for you. The Tata co-owned DTH company has shelved plans for an initial public offering (IPO). Having run in to high debts it is now planning to raise Rs 1,800 crore ($300 million) from private equity firms.

As per a news report in The Economic Times, Tata Sky had planned to list the venture and raise Rs 2,000 crore by selling 25% stake in 2013. It had even shortlisted investment banks Citigroup Capital Markets, Morgan Stanley India Equities and Kotak Mahindra Capital Co to manage the issue.

From a reliable source, the ET has learnt, Citi and Morgan Stanley have been retained but now the mandate is to raise PE funding. The company has been bleeding under high debt and slower sales pick-up, and has revised its valuation expectations after the bankers didn't get initial demand from global institutional investors.
ET could not independently verify these names. Confirming that the company has shelved its listing plans, Harit Nagpal, chief executive officer of Tata Sky in an SMS response said: "All our cash requirements have been and will continue to be met by existing shareholders."
Data from Capitaline shows that in 2013-14, at a standalone basis, the company made a loss of Rs 280.4 crore on net sales of Rs 3,023.2 crore compared with a net loss of Rs 378.9 crore on sales of Rs 2,286 crore recorded in the previous fiscal. Finacials for FY15 were not available.

In comparison, Dish TV, Asia's largest direct-to-home service operator, has a market capitalisation ofRs 10,319.56 crore. In FY14-15, it clocked Rs 2,781.64 crore of revenues and a Rs 796-crore EBITDA and aRs 1.01-crore net profit on a consolidated basis.
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Tata Group holds 60% stake in Tata Sky along with Rupert Murdoch's 21st Century Fox owning around 30% stake. PE firm Temasek, through its arm Bay Tree Investments and Tata Opportunities Fund (TOF) holds the residual stake in the company.

(Image: Reuters)