A host of private equity (PE) firms have joined the race to acquire STAR’s stake in Balaji Telefilms. New Silk Route (NSR), 3i and Kotak are learnt to be in talks with the television production house to buy 25.99% stake, originally held by STAR. The promoters will now have to buy back the stake at Rs 190 per share within the stipulated time frame of 240 days. ET on Friday reported that ADAG and Eros International are also in the fray to acquire the STAR stake.
A source told ET: “With the current slowdown in export-oriented sectors such as IT and ITeS, PE firms are increasingly looking at expanding their media investment portfolio. Especially with the emergence of addressable distribution system (DTH & CAS), content creation would witness increased PE fund infusion.” The source added that Balaji being a successful television content production house will be an attractive opportunity for PE players.
When contacted, Balaji Telefilms CEO R Karthik said: “We are in talks with several players but no final decision has been taken yet. We are not in a position to comment.”
All the three PE firms have already made investments in the media and entertainment sector in India. The UK-based PE player 3i has picked up stake in two entertainment companies in India. In 2005, it had picked up 35% stake in Nimbus Communication for an estimated $45 million and in January 2007, it had invested $22 million in digital cinema chain UFO Moviez. Both Kotak and NSR have made investments in Indrani Mukherjee-promoted INX Group.
According to an analysis by Yes Bank, in the first half of 2008, there were close to five deals in the Indian M&E Industry amounting to a whopping $186 million. Some of the sizeable deals include ICICI & JP Morgan that picked up 20% stake each in PVR pictures for $30 million and Warburg Pincus 15% stake in Laqshya Media for $64 million, among others.
Rupert Murdoch-controlled STAR Group, through Dubai-based affiliate Asian Broadcasting FZ-Llc, bought a 21% stake in Balaji for Rs 123 crore in 2004. This was followed by an open offer, which increased its stake to 25.99%.
Source: Economic Times