Monday, May 15, 2006

Eros to List in LSE..

Move aside Adlabs........
Most of us are quite familiar with this logo.
This is the logo of Eros International and the logo is seen in many VCDs and DVDs of Bollywood movies. Eros International is a distributor of Bollywood films and does most of its business overseas.

Eros, it seems is likely become one of the largest players in Bollywood. It might even be the largest, after it gets listed in the London stock exchange. This, about $ 44 Million ( This year estimates), film distribution company is about raise $100 Million from the LSE, which will make its valuation a whopping $400 Million. Unheard of for a Bollywood film Company, even a production company, leave aside Distribution companies.(Internal sources say that Yash Raj Films shouldn’t be discounted here, I don’t have the figures though..)

The closest would be when Reliance Capital had acquired a 51 per cent equity stake in Adlabs Films Ltd for Rs 360 crore, valuing Adlabs at around 700 crores, which is not even half of what Eros is being valued at. And Adlabs is present along the whole value chain of Movies, right from production, processing, distribution to exhibition. They even signed on Ram Gopal Verma for 80 crores for the production of a series of movies, factory produced movies?

My question is what will Eros do with the money? Will they enter the riskier business of production or like everyone else will they enter less riskier and more attractive (incentives et al) business of exhibition, now everybody from a Chemical Manufacturer is onto the Multiplex bandwagon. Either way It will be a competition to Adlabs.

How might Adlabs face the threat? The best thing would be go overseas and raise more money like Eros did. Anil Ambani would love it. He is an expert in raising finance from overseas and word is out that he is taking the film bizness very seriously, Domestic pressure, perhaps!

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