DTH major Tata Sky is now considering a second round of funding of $150-200 million and is in conversation with various private equity players such as Providence, Carlyle, Blackstone, Goldman Sachs and Apax Partners.
Tata Sky is looking at diluting about 10% stake. The current holding structure of Tata Sky looks like this: 20% with Star (FDI), 10% with Temasek (FII) and 70% with the Tata’s.
By law, a DTH operator in India has to be have a minimum holding of 51% by an Indian entity. Singapore-based PE player Temasek had bought about 10% for about $56 million. The valuation of the company in three months has risen more than two-fold. “We have been approached by several private equity players. If and when we decide to go in for a second round of funding, we will let you know,” said Tata Sky CEO Vikram Kaushik.
Tata Sky’s fund-raising is timed to coincide with the proposed launch of Reliance Communications and Bharti’s DTH operations. In order to face the threat from Reliance and Bharti, Tata Sky needs to ramp up in terms of infrastructure and technology.
Sources also said that the Tata group would look at retaining close to 10% of equity with itself beyond the minimum 51% stipulated amount as it would look at taking the company public in the future. Incorporated in 2004, Tata Sky is a 80:20 JV between the Tata group and television network Star. The DTH service was launched last year.
The JV partners had earlier stated that the project cost for the venture would be around Rs 3,000 crore. Other than conditional access system notified areas, the DTH product of Tata Sky is available in 4,200 towns across the country and the company plans to cover another 1,500 towns by the year-end.
Source: Economic Times