Companies: CITE    EROS    EVN   

Two AIM entrants looking to consolidate fragmented parts of the film industry have provided intriguing viewing for the market, while the impressive institutional support shown for telecommunications newcomer Citel should also turn investors’ heads.

Manx-headquartered film distributor Eros International recently debuted on AIM with a £22.5 million plus placing, giving it a £176 million price tag and creating the largest listed company in the Indian film industry in terms of market cap. Chief operating officer Jyoti Deshpande insists that with Eros already a sizeable player in the fragmented Bollywood market, now is the perfect time ‘to take a leadership stance’ in the consolidation wave.

Bollywood booming

Analysts predict the $4.5 billion Indian entertainment industry will burgeon by 18 per cent over the next five years, with the film segment of that growing to around $2.8 billion, and the TV element to $6.5 billion.

Eros plans to use the float cash to add to its current library of over 1,300 Bollywood titles across formats ranging from theatre, DVD and TV to new media, which are distributed globally through a network across the UK, India, the US, UAE, Australia and Fiji.

‘Bollywood is crossing over to locals in many markets,’ declares Deshpande, ‘and we are trying to break out beyond expatriate Indians. Over the last three or four years Bollywood has crossed over in a major way with the locals of Germany, Malaysia, Indonesia and parts of Russia.’ She claims a Bollywood film in Germany recently eclipsed viewing figures for Big Brother – some feat!

Placed with the City’s institutional great and good at 176p, the shares soared to 192.5p, a 9.5 per cent premium taking the market capitalization north to £192 million. I believe the shares, 84.4 per cent held by Beech Investments, in which chairman and chief executive Kishore Kumar Lulla has a beneficial interest, could still reward.

A pan-European vision

Also with consolidation uppermost in its mind is Europe Vision, chaired by seasoned executive David Lowe, formerly John Lennon’s lawyer, who professes involvement with ‘over 500 films’ through his partnership of a law firm specializing in the silver screen.

Lowe has grand designs and C50 million initial cash. He intends to consolidate the media and entertainment distribution industries across all platforms such as theatrical, pay-per-view, video-on-demand, mobile and online, starting with Scandinavia and then ‘spreading that philosophy to other territories’. Lowe says that, based on the North American model where film studios are completely integrated with interests in production, distribution, video and TV, Europe Vision aims to buy-and-build itself a powerful business from the fragmented European film distribution industry.

He has already begun with the acquisition of Swedish distributor Tritel Media, which has itself paid C160 million for an 11 per cent slice of, as well as the Scandinavian distribution rights for, a C1.3 billion project being constructed by the Moroccan government, with film studios at its core. Europe Vision, which joined AIM by way of an introduction, having already been privately backed when on the Nordic Growth Market, is valued at £170 million and could prove a captivating ride for the brave.

Citel’s stellar cast

My head has also been turned by a stellar cast of institutional characters already on board at Nottingham-based newcomer Citel. The company has developed technology allowing cheap voice-over-internet (VoIP) calls to be made and received with a normal digital phone handset, unlike the specially designed phones normally necessary.

The alluring prospect of playing for a North American VoIP services market set to grow to $23.4 billion in 2009 has attracted institutions including Aberdeen Asset Management, Framlington, Gartmore, Schroders and Invesco, as well as float sponsor Panmure Gordon. This could prove a list worth joining.