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Creative Eye’s bookbuilding offer oversubscribed 3.4
times
ln its second attempt to tap the public, TV software production
company Creative Eye has met with some success as the bookbuilding
portion of its IPO has been oversubscribed by around 3.4 times.
The bookbuilding portion was closed for subscription last
Thursday. According to market sources, the bookbuilding initial
public offer (IPO) has received a good response from retail
and high networth investors.
The company offered 45 lakh shares through the bookbuilding
portion. Of this, around 15 lakh shares constitute the retail
portion which has been oversubscribed by around 5.5 times,
according to the source.
Some good institutions have committed to the issue and the
institutional portion of 30 lakh shares has been oversubscribed
by around 2.3 times.
Creative Eye had a bad experience a few months back in its
first attempt to go public. The media company had offered
shares through bookbuilding at a much higher floor price of
Rs. 225 for a Rs 10 share. However, the company received only
1.25 times over-subscription and retail response was poor.
The company was forced to withdraw the IPO and has now come
out with a much lower floor price of Rs. 50 for a Rs. 5 share.
Although the bookbuilding portion of the IPO is through, this
may not ensure a good response from small investors as this
section is slowly fleeing the primary market, according to
a merchant banking source. The retail portion has been oversubscribed
by 5.5 times, but it’s still not known how many small
investors have bid for shares. Nevertheless, the company has
hit the market at a time when stocks in general are witnessing
a rally.
However, small investors are still cautious. This is reflected
in the fact that some of the recent media and software issues
have received poor small investor response. For instance,
IT&T ’s recent Rs. 31-crore IPO at a price of Rs.
86 has devolved on the underwriters.
Creative Eye’s fixed price portion of 5 lakh shares will
open for subscription on November 23 and will close on November
28. The company is now setting up a Rs. 40-crore project.
It has earmarked Rs. 2 crore for development of portals, Rs.
6.5 crore for procurement of film rights, Rs. 2 crore for
expansion of marketing network, Rs. 4 crore for acquisition
of rights/commercial time on TV channel, Rs. 3 crore for expansion
of post-production studio and Rs. 2 crore for TV software.
Besides, Rs. 17 crore has been earmarked for working capital
requirements. The entire funds requirement is being met from
the current public issue.
For fiscal 2000, the company recorded a net profit of Rs.
2.85 crore on total income of Rs. 49.77 crore. For the three-month
period, net profit stood at Rs. 1.41 crore on total income
of Rs. 18.84 crore.
Jai Kumar NR
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