Inox prepares for a ₹250 cr fundraise as theatres reopen2 min read . Updated: 28 Oct 2020, 06:39 AM IST
- The fresh capital will be used to strengthen Inox’s financial position by repaying existing loans, funding capex etc
Inox Leisure Ltd, India’s second-largest multiplex operator, is preparing to raise as much as ₹250 crore through a qualified institutional placement, hoping to attract investor attention with movie theatres reopening after a more than six-month closure, said two people aware of the plans.
“Inox is working with investment banks ICICI Securities and IIFL for the fundraise. In August, when theatres were still shut, they had done a block deal of ₹100 crore, selling Inox shares owned by their treasury; it had received a good response from investors. So, now that theatres are reopening and various macro indicators are looking better, they expect the share sale to see a good response from investors," the first person cited above said, requesting anonymity.
The block deal in August was done at ₹233 per share, and since then the stock has risen more than 10%, the person said. “They will look to close the deal in this quarter," he added.
Inox Leisure and ICICI Securities declined to comment. An email sent to IIFL did not elicit a response.
The fundraising effort follows the government permitting movie theatres to resume screenings from 15 October with 50% capacity.
Inox said in a regulatory filing on 16 October that it has begun the process of reopening its properties in West Bengal, Gujarat, Karnataka, Uttar Pradesh, Assam, Andhra Pradesh, Haryana, Madhya Pradesh, Delhi and Goa. The company has a portfolio of 626 screens across 68 cities.
From their lows in May, shares of Inox have jumped nearly 60% to ₹264.25 apiece.
The fresh capital will be used to strengthen the financial position of Inox by repaying existing loans, managing working capital requirements, as well as for funding capital expenditure on under-construction properties, the second person cited above said.
Inox’s rival PVR Ltd had in August raised ₹300 crore through a rights issue.
While the movie exhibition industry finally has something to cheer for after being shut for more than six months, it faces several near-term challenges, and it is expected to take some time before returning to pre-covid levels.
A few states, including the key market of Maharashtra, are yet to take a call on reopening movie theatres. Maharashtra contributes about 20% of box office collections for both PVR and Inox.
The first two months of reopeningwill be quite challenging given costs will start first while revenue will come with a lag, said analysts at Edelweiss in a recent note.