Soon, the satellite television business of the Tata group, Tata Sky, is planning to file draft share sale documents with the markets regulator for an initial public offering (IPO).
Tata Sky IPO
According to the sources, Tata Sky will soon file an IPO by the end of this fiscal year, in March.
The person aware of the development said, “work on the draft IPO prospectus is in advanced stages and could be filed with Sebi (Securities and Exchange Board of India) by next month; so, the deal could possibly be launched before the end of this fiscal,”.
Kotak Mahindra Capital, the investment firm, is advising Tata group on the IPO along with a couple of foreign investment banks, sources said.
Why This Suggestion?
Basically, this IPO will provide an exit to investors, especially Disney which has been looking to sell its stake, as per the sources.
Further sources said, “Disney does not have investments in any other distribution platform apart from Tata Sky. This is non-core for them, and they want to focus on their main consumer-focused business of Disney+, given the fierce competition in the OTT market. Other options were explored in the past to either bring in a strategic investor or Tatas buying Disney’s stake; but right now, it looks like the IPO is the way forward for the company,”.
Apart from Disney, “there are other investors, too, such as Temasek and Tata Capital, who have been invested in the company for a long time. They, too, would like to dilute some of their stakes. Disney, too, will sell part of its stake in the IPO,” sources added.
Tata Sky IPO Details
As per the sources, the proposed IPO’s size may vary between Rs 2,000-3,000 crore.
It will have a mix of primary capital raising for use in the business and secondary share sales by existing investors.
The DTH service provider started its operations in 2004 as an 80:20 joint venture between Tata Sons and Network Digital Distribution Services FZ-LLC, an entity owned by Rupert Murdoch’s 21st Century Fox.
Later on, Disney acquired Fox in 2019. Now, Disney owns an additional 9.8% stake in Tata Sky through TS Investments Ltd.
While Fox owned a 49% stake, with Tata owning the rest.
Afterwards, Baytree Investments (Mauritius) Pte Ltd (Bay Tree), an affiliate of Temasek, acquired a 10% stake in Tata Sky in FY08.
Tata Opportunities Fund and Tata Capital Ltd acquired an equity stake in the firm In FY13. Thus, Tata Sons has a 41.49% stake in the company.
So far, Temasek and Tata Capital declined to comment.
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