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 Bollywood film group Eros International, has had to slash its flotation price as it seeks entry to the market this week. The plan was for the company to raise more than $100m (£55m) at an initial public offer this week that would have given a market capitalisation valued at up to $500m.
Eros now is cutting the number of shares on offer to investors to raise as little as $40m. this would value the company at only around $350m. The reduced take-up of shares could be a handicap to the company's future acquisition strategy.
Eros has been advised by Evolution and it's blieved the financial adviser may have reported to the Eros board that a faltering IPOs market has made fundraising much harder than previously. One executive who has links to Eros has been quoted as saying the adviser Evolution was being more cautious about the Eros valuation than the company itself.
Eros, founded in 1977, has the rights to distribute more than 1,300 Bollywood movies, distributing 40% of Bollywood films seen in the UK.
Last year over nine months Eros' profit before tax, interest and goodwill was $12.6m on a turnover of about $32.2m. Annual sales this year are forecast at about $44m.
The Bollywood film industry, based on the Indian city of Mumbai, employs 6m people and makes about 800 films per year.
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