4 July 2007

India media firms see rewards in listing overseas
Reuters News
(c) 2007 Reuters Limited

MUMBAI, July 4 (Reuters) - An Indian movie company's debut on London's junior AIM bourse could spur more media firms to look long-distance and take advantage of investor hunger for emerging Indian sectors such as media, property and hospitality.

Global investors want to buy into India's fast-growth economy, with more than half its 1 billion-plus population aged below 25 seen as having the potential to boost demand for everything from consumer goods to entertainment.

Shares in UTV Motion Pictures Plc. rose 6 percent on their Monday debut on London's AIM market, valuing the firm at more than $320 million after the Mumbai-based unit of UTV Software Communications raised $70 million in an IPO.

"It's a very valuation-friendly environment now and investors are hungry for India opportunities, particularly in emerging sectors like media, real estate and hospitality," said Atul Phadnis, chief executive of research firm Media e2e.

Also AIM-listed, shares in India Hospitality Corp. have risen 40 percent in nearly a year, though real estate funds Hirco Plc. and Unitech Corp Parks have failed to sparkle.

Film company Eros International and Indian Film Co. have recently tapped the AIM, attracted also by its more relaxed restrictions and disclosure requirements.

Others, including ventures of Bollywood star Amitabh Bachchan and director Shekhar Kapur, may also be eyeing overseas listings.

"A foreign listing can boost valuations and attract more foreign investors who may be restricted in India," Phadnis said.

Brokerage Prabhudas Lilladher raised its rating on parent UTV Software stock to "buy" from "hold" ahead of the AIM listing and analysts expect the firm to spin off and list its broadcast and new media units on the AIM or Nasdaq in two years.

"In India, UTV is benchmarked with pure-play Hindi movie producers, but overseas exchanges understand its model better and the listing will facilitate more international alliances," analyst Dilip Bhat said.

AIM-ING HIGH

Much of the enthusiasm for the AIM comes from the exchange's less onerous listing requirements. Listings can also be smaller.

"Entry barriers are low and it is positioned as a bourse for high-growth companies from emerging markets, so valuations tend to be attractive and generous," said Vivek Couto, executive director at research firm Media Partners Asia.

"Smaller media firms will also list there because they do not want to be overlooked in India in the rush to invest in bigger firms like Zee, Sun TV or HT Media ."

UTV, which holds 75 percent of the film unit -- which has co-production deals with News Corp.'s Fox Searchlight and Sony Pictures -- is valued at nearly 12 billion rupees ($296 million), compared with top listed media firm Zee Entertainment Enterprises Ltd. at 126 billion rupees.

UTV shares trade at 45 times forecast earnings against 37 times at Zee after it spun off and listed its broadcast, cable and satellite arms on the local Indian exchange recently.

But analysts caution there are concerns about the quality of companies listing on the AIM, due to its less strict listing rules. Also, a shift in global sentiment towards media may quickly drive investors back to more traditional bets.

Still, analysts expect that as long as markets are buoyant and interest in India persists, overseas listings will beckon.

"India is a very hot property now and, across the board, there is greater interest in Indian firms," said Soumendra Lahiri, fund manager at DSP Merrill Lynch, which is "overweight" on media stocks.

"Even local investors will look more favourably at companies with a .L code," he said, referring to the London stock code.