Creador takes proprietary route to MNC IPO

25.07.12 / Author: Susannah Birkwood, Asian Venture Capital Journal

One of the biggest criticisms leveled at private equity firms that anchor IPOs is that LPs expect them to do proprietary investments. When Saban Capital and Creador Capital performed the anchor role for MNC Skyvision’s $228 million offering earlier this month, though, proprietary is precisely what the deal was.

Saban was already a 5% shareholder in PT Media Nusantara Citra, another subsidiary of Sky Vision’s parent company Global Mediacom, so was one of the first to hear when the company – the largest pay TV business in Indonesia – was looking to raise capital. Creador CEO Brahmal Vasudevan first met with Hary Tanoesoedibjo, group CEO and president at Global Mediacom, three years ago, meanwhile, under his previous incarnation as managing director for India-focused GP ChrysCapital.

“We met with Hary before we started looking in Indonesia and were very impressed with how they were building Sky Vision,” Vasudevan tells AVCJ. “We liked this industry a lot and we liked the dynamics of Indonesia, so when we started our new firm, he was one of our first ports of call.”

By chance, it was at the very moment that Creador was created – in September last year – that Skyvision was seeking third-party funding. The company originally planned to go public in the third quarter but weak investor sentiment saw the deal postponed until July. Saban bought 17% of the issued shares for $37 million – equivalent to around 3.5% of the company – while Creador Malaysia took a further 13% (3% of MNC Sky Vision). Creador paid $28 million, with $13 million taking the form of a co-investment by one of its LPs.

When considering what attracted the firms to the transaction, the numbers speak for themselves. Jakarta-based Skyvision’s revenues grew at 26% per annum over the last two years reaching $187 million this year, while EBITDA swelled by 43% to hit $79 million in 2011. Creador predicts the EBITDA will grow to $107 million and $137 million in 2012 and 2013 respectively.

“Skyvision has demonstrated an excellent strategy, and that’s reflected in its 70% share of Indonesian pay TV market,” adds Vasudevan.

Proceeds from Skyvision”s IPO will be used to finance subscriber acquisition plans and its migration of set top boxes from MPEG-2 to MPEG-4 technology. In updating the set top boxes, the company hopes to increase the number of channels offered and in turn boost subscription revenues. Subscriber numbers already total 1.4 million.

In Vasudevan’s eyes, the IPO was as successful as Creador could have hoped. The only thing the firm would have liked is a larger slice of the pie. “The company had always targeted to raise $200 million and they got $520 million in demand,” says Vasudevan. “We wanted to invest about $40 million and got back to $28 million; there were investors who wanted to invest $20 million that were restricted to $10 million.”