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Ortel IPO: New Silk Route not to make full exit

MUMBAI: In a change of stance, New Silk Route has decided not to unload its entire stake in Ortel Communications through the initial public offering (IPO). The part exit will mean that the private equity firm will hold 7.14 per cent stake in the Odisha-based independent multi-system operator (MSO) after the IPO, down from 33.3 per cent.

In its draft red herring prospectus (DRHP) filing in September 2014 with the market regulator Securities and Exchange Board of India (SEBI), Ortel had said that New Silk Route would make a full exit through the IPO. But in its final RHP filing for an IPO, Ortel has said that New Silk Route would continue to hold a small stake in the company.

As per the filing, New Silk Route will sell 26.67 per cent stake in Ortel representing 6,000,000 or six million equity shares through the public issue.

Post IPO, the promoters will hold 51.03 per cent stake in Ortel, down from 63.49 per cent. Promoted by Biju Janta Dal (BJD) MP Jay Panda and his family, Ortel is the dominant MSO in Odisha. It also has operations in Chhattisgarh, Andhra Pradesh and West Bengal.

Upon successful completion of the issue and commencement of trading of the equity shares of the company on the stock exchanges, New Silk Route will retain no special rights. The shareholders’ agreement and the NSR SSA promoters’ agreements will stand terminated.

Besides New Silk Route’s shares, Ortel will issue six million fresh equity shares.

The public issue will have up to 12,000,000 or 12 million equity shares of face value of Rs 10 each constituting 39.25 per cent of the fully diluted post-issue paid-up equity share capital of the company.

Opening on 3 March, the issue will close on 5 March.  The company has said that it will announce the price band and minimum bid size of the issue at least five working days prior to the bid opening.

Ortel will use part of the IPO proceeds to fund expansion of network for providing video, data and telephony services. It will also utilise the amount for digital cable and broadband services.

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Ortel to open IPO on 3 March