New Delhi: Stock market regulator Securities and Exchange Board of India (Sebi) has given its approval to a Rs600 crore initial public offering (IPO) by cellular operator Spice Telecom Ltd, a firm that runs networks in Punjab and Karnataka. The company is raising cash to pare debt and meet capital expenses.
Spice Telecom, part of the New Delhi-based B.K. Modi group of companies, said Sebi’s observations on its draft prospectus filed in February paves the way for a June float of its shares. “We expect to file the revised prospectus in the first week of June and open bids in the third or fourth week,” said Priti Malhotra, company secretary and spokesperson for the firm.
An IPO prospectus is meant to give potential buyers of shares in an initial share sale an insight into the issuer’s financial health and business prospects.
Spice Telecom plans to sell nearly 138 million new shares, equivalent to almost 20% of its enlarged capital base. The issue will reduce the stakes of the two current shareholders—the B.K. Modi group and strategic investor Telekom Malaysia Bhd. While the Modi group’s stake will fall from 51% to 41%, its Kuala Lumpur-based partner’s stake will shrink from 49% to 39%.
Telekom Malaysia had acquired the stake in the Indian mobile operator for $179 million (Rs733 crore) in March last year, valuing Spice Telecom at $365 million. At that valuation, each of its 552 million shares was worth around Rs27.70. To raise Rs600 crore, which is the amount Modi has said in the past that Spice Telecom will raise, the firm will have to sell shares at Rs45.80 each. The phone firm has not disclosed pricing details yet.
Besides the 138 million new shares being issued to the public, the Modi group has pledged another 137 million shares from its own holding to DBS Bank Ltd as collateral for a loan of $265 million in April last year. “Our lenders have certain rights to determine how we operate our relevant businesses.
Consent from these lenders is required for certain corporate and business actions, changes in shareholding and management decisions,” the company had said in its draft prospectus in February.