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Share Flotation to Value India’s UFO Moviez at $270 Million

UFO Moviez, India’s largest digital cinema network, is on course to be valued at 17.2 billion rupees ($270 million) following an initial public offering that is now under way.

Last week the company raised $28.5 million from a clutch of new cornerstone investors and is now selling shares worth a further $66.4 million in a public offering priced at 615-625 rupees per share. That is 20% smaller than the company had previously indicated, reflecting challenging stock market conditions.

The new institutional shareholders include Reliance Capital, SBI and Kotak Mahindra and funds associated with PineBridge Global, Jupiter South Asia, Amundi, Ashmore SICAV and Bharti AXA Life Insurance.

The IPO shares represent the sale of positions previously owned by 3i and Providence Equity. Providence backed the company in 2011 and is the largest shareholder.

UFO Moviez works with India’s independent and single screen cinemas and operates the country’s largest satellite-based, digital cinema distribution network (in terms of numbers of screens). Earning revenue from both exhibitor and distributor, it delivered more than 1,500 movies in 22 languages to 4,703 screens in 2014. It also earns a growing proportion of its revenue by operating as a platform for advertising. Including cinemas overseas, UFO had some 6,600 screens in its network.

Sanjay Gaikwad, managing director of UFO Moviez India, said they will use the new cash to retire debt. He forecast that revenue growth will slow in the distribution business as the rollout of digital cinema nears completion. But he says that growth in advertising revenue will occur rapidly.

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