Music Broadcast, which operates leading FM radio station Radio City, is planning to list on the stock exchanges and is set to come out with a public offer of more than ₹500 crore comprising a fresh issue of ₹400 crore and an offer for sale of 26.59 lakh equity shares by the promoters’ family.
The funds from the issue will be used to retire debt of about ₹150 crore and the balance to create a “war chest” for future acquisitions.
“We have already filed the DRHP and post regulatory approvals, we intend to hit the capital market,” said R. K. Agarwal, CFO, Jagran Prakashan Ltd., promoters of Music Broadcast Ltd. “Bulk of the funds will be utilised to strengthen the capital structure so that a war chest is created to acquire more radio stations as and when opportunity arises.”
“We see lot of opportunities in radio as our business has been growing at a CAGR of 15-16% for several years and we have been operating at a margin of 33%. We have received encouraging response from investors,” he added.
Radio City, which operates FM stations in 29 cities and is set to expand to 39 locations, was started by STAR India in 2001 and after changing many hands is now the radio business of the Jagran Group.
Apurva Purohit, director, Music Broadcast Ltd., said: “The radio sector is the youngest in the M&E sector but a fast growing one. Radio's share in the media and entertainment industry pie is just 4% of the total advertisement market size due to slower pace of regulation, which otherwise could have been as high as 12%. Private FM injected fresh stimulus into radio business and the exponential growth inspires us to invest heavily.”
For the half year ended September 2016, Music Broadcast posted a net profit of ₹29.76 crore.
