ln its second attempt to tap public, 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 on Thursday.
According to a market source, the bookbuilding initial public offer (IPO) has received 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 oversubscription 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.
Creative Eye, the television production and marketing company, produces programmes for Doordarshan, Sony and Gemini TV. 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.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.