Music Broadcast IPO opens today: Here's what you should know

The initial public offer (IPO) of Music Broadcast Limited (MBL), owner and operator of FM radio channel Radio City, opened for subscription on today with close to 6 per cent of the issue being subscribed within the first hour of bidding.

The fresh issue is said to constitute 21.1 per cent of the post-issue paid-up equity share capital of the company, if the issue is subscribed at the upper end of the price band.

Here are the key points you need to know:

 

1. The company is offering 0.27 crore shares that are being sold by the promoter group.
2. The company is raising Rs 400 crore through a fresh issue of equity shares in the price band of Rs 324-333.
3. The issue consists of equity shares with the face value of Rs 10 each.
4. Proceeds from the issue will be used to clear a large portion of the company's Rs 300 crore debt which will reduce costs and improve cash flow.
5. The operator of Radio City has already raised Rs 146.5 crore by allocating 44,01,158 equity shares to anchor investors at Rs 333 per share.
6. Post the issue, Jagran Prakashan's promoter holding in MBL will be reduced to 71 per cent from its current 89 per cent.
7. The issue will close on 8 March, 2017.

According to an Angel Broking report, a slowdown in Indian economy and an increase in content price could pose as the two major risks MBL could face.

 

"A slowdown in the economy could affect the spending from the clients, which in turn would affect the company's overall earnings. Inability to effectively source music content from third party music production entities/associations can increase the input cost for the company, and hence, may result in the dip in margins," said the report.

MBL has a strong leadership and is ranked as the number one in terms of listeners with a total of  49.6 million across 23 cities.

It also has presence in the Internet Radio Space with PlanetRadioCity.com - 40 web radio stations in 8 languages.