A line-up of private equity investors, including the biggies, are in the race to buyout the 32% stake held by Indian promoters in Sony Entertainment Television (SET). Sources said Warburg Pincus, Blackstone and Standard Chartered Private Equity, among others, were exploring a possible deal after SET kicked off a stake divestment process to facilitate the exit of the Indian promoters and Capital International.
It is believed the promoters are seeking an equity valuation pegged between $1billion and $1.5 billion for the company, valuing the local shareholding at around $300-400 million. Sources said some potential suitors may value the company at around $1 billion, and it is not certain whether it would meet with approval from the existing shareholders.
Asked about Indian promoters being in talks with private equity investors, Kunal Dasgupta, chief executive officer, SET, said: “This is not an area that I comment on.” The five local promoters exploring exit include actor Jackie Shroff, Shemaroo Films managing director Raman Maroo, World Media group director Sudesh Iyer and MobiApps Holding’s Jayesh Parekh. An email sent to Ron Sato, vice-president of corporate publicity at Sony Pictures Television International, remained unanswered at the time of filing the story.
SET has mandated Standard Chartered Bank to run a process for showing up with a suitor for the 32% stake. This came after the media company’s proposed IPO plans failed to take off. SET was seen preparing for a Rs 900-crore capital market debut which would also provide an exit route for Mr Shroff and others.
Sources said at least six funds had evinced interest initially, with two of them walking out of the sale process. Other funds — like Providence, for instance — could also participate in the process, sources added.
Sony is one of the leading broadcasters in the Rs 10,000-odd crore broadcasting market. The bouquet includes its own channels like Sony, MAX, SAB TV and AXN, as well as NDTV, HBO, Animal Planet and Discovery, MTV and Nick.
Besides valuation, another factor that could threaten the divestment process is the nagging issue of exit option for private equity investors. Sources said the PEs have asked for a firm commitment from Sony on exit route, especially after the recent flip-flops in tapping the capital markets.
It is believed Sony Pictures Entertainment (SPE), which holds a 62% stake in SET India, was not too enthusiastic about an IPO following a significant drop in valuation that topped $2 billion about two years back. Also, Sony Corporation, Japan is the only listed company within the behemoth’s global system.
Sony, which has not listed a single subsidiary across all its operations, was not too keen on listing the Indian entity in isolation. However, sources added the latest divestment move — the most serious effort till date — was kick-started after contemplating plans to offer an exit to financial investors over a three-to-five-year time frame.
Source: Economic Times