Now under Reliance, HomeShop18 scraps proposed $75M IPO on NYSE

HomeShop18 has scrapped its proposed public issue which sought to raise a total of $75 million through a listing on the New York Stock Exchange (NYSE) including offer for sale by some shareholders such as its CEO Sundeep Malhotra and parent Network18, as per a SEC disclosure on Wednesday.

The firm said it has decided not to proceed with the offering as it is re-evaluating its capital raising strategy.

This comes within months of change in management of Network18 where Reliance Industries took over as part of a previous deal struck over two years ago.

HomeShop18, which operates a television home shopping network and also runs an online marketplace, is part of media house Network18 and is backed by PE firm SAIF Partners and funds managed by OCP Asia; it also counts South Korea's GS Home Shopping as a strategic investor.

Both the financial investors as well as GS Home Shopping were staying put and had not offered any shares for sale.

Currently HomeShop18, which is headquartered in Noida, is operated by TV18 Home Shopping Network Ltd, which in turn is owned by Cyprus-based holding entity NW18 HSN Holdings PLC (formerly TV18 HSN Holdings Ltd). This entity is a step-down subsidiary of Network18 (through Network18 Holdings Ltd, Mauritius) and counts SAIF Partners, OCP and GS Home Shopping as minority shareholders.

NW18 HSN had filed documents with US securities regulator in April this year for the proposed offering.

This would have made it the second Indian products e-commerce firm to go public after fashion e-tailer Koovs, whose parent listed on London's AIM market early this year.

NW18 HSN had said Rs 250 crore ($42.3 million) of the proceeds that Network18 Holdings Limited expects to receive from its sale of ordinary shares in the offering will be paid directly to NW18 to fully fund all of its partially paid preference shares and warrants held by Network18 Holdings. Thereafter these preference shares and warrants will immediately convert into its ordinary shares.

As a result of this conversion, the compulsorily convertible preference shares of NW18's Indian operating subsidiary, currently owned by Network18, will convert into ordinary shares of TV18 Home Shopping Network. Shortly after the completion of the IPO, NW18 was to use the funds it receives from Network18 Holdings to purchase the ordinary shares of the key Indian subsidiary issued to Network18 upon conversion of these convertible preference shares. This was to be completed within 45 days of the IPO.

HomeShop18

The firm launched HomeShop18 television channel in April 2008 and its e-commerce property HomeShop18.com in January 2011. Its revenues are derived from the commission it gets from the sale of products by its vendors through its platforms. It still generates bulk of its revenues from television shopping business.

Its revenue from operations grew from Rs 87.5 crore ($19.2 million) for fiscal year ended March 31, 2011, to Rs 117.6 crore ($24.5 million) for FY12 and Rs 221.8 crore ($40.7 million) for FY13. For the first six months of the last financial year (April 2013-September 2013) it clocked revenues of Rs 153.9 crore ($25.6 million), up 66 per cent over the year-ago period.

HomeShop18's gross transaction value grew from Rs 285 crore ($62.6 million) for fiscal year 2011 to Rs 522.3 crore ($108.5 million) for fiscal year 2012 and Rs 907.7 crore ($166.5 million) for fiscal year 2013. Its gross transaction value reached Rs 568.9 crore ($94.6 million) in the six months ended September 30, 2013, compared with gross transaction value of Rs 383.2 crore ($69.8 million) in the six months ended September 30, 2012.

What's interesting is that bulk of the growth in transaction value, had come from its television business while its e-commerce unit has almost been flat at around Rs 139 crore in the first half of last financial year, almost the same as the year-ago period. In the same period value of products sold through its television channel had moved up from Rs 244.5 crore to Rs 429.6 crore. Detailed financials for this year is not available.

(Edited by Joby Puthuparampil Johnson)