RPG in talks with FIs to offload 25 per cent stake in MusicWorld

Subhadip Sircar

Mumbai, May 22: THE RPG group is in talks with ICICI, UTI and IL&FS for offloading 25 per cent stake in MusicWorld Entertainment, a division of Spencer & Co, the retail arm of RPG Enterprises. The group expects to rake in Rs 30 crore from the proposed sale.

Group sources confirmed that they were in talks with the three institutions which had evinced an interest to pick up the stake. “We are looking at a strategic investor or a venture capitalist to offload up to 25 per cent stake mainly to fund our next phase of expansion,” said group sources.

Negotiations are on with the concerned parties and a final decision is expected only in course of the next 10-20 days, group sources added. JM Morgan Stanley has been appointed as merchant bankers for the deal. Senior group officials added that the move was mainly to infuse funds for the next phase of expansion of MusicWorld. Group sources added that there were, however, no similar plans to rope in investors for its other retail chains — FoodWorld and Health & Glow. This is because the group has an existing joint venture with the Hong Kong-based Jardine Matheson group for these two forays. However, the need for bringing in a different partner for Music World arose because Jardine Matheson has no business interest in music.

MusicWorld currently has 11 stores across Chennai, Kochi, Bangaloere, Hyderabad, Delhi, Chandigarh and Kolkata. The company achieved sales of around Rs 20 crore in the last fiscal. MusicWorld has a tie-up with 116 big and small music companies including Sony, Universal BMG, Tips and T-Series. The group’s HMV brand has carved out a 15 per cent slice of MusicWorld’s cassettes and CD sales. The genre of MusicWorld stores range across nearly 50 categories. In most outlets, 35-40 per cent of the titles are overseas throughput, 20 per cent provides regional content and over 25 per cent is local content.