At least three private equity (PE) majors?Quadrangle Capital Partners of the US, Singapore?s Temasek Holdings and European firm Permira?are believed to be eyeing Star India?s 26% stake in Balaji Telefilms, according to sources.
The deal, if it goes through, will be the first significant deal in India for Quadrangle, which focuses on the media and communications segments worldwide, and Permira, which manages over 22 billion euros worldwide. It is expected to be finalised by the end of this month and would be in the region of Rs 250-300 crore at current market prices, though sources claim Star will eye a premium over the current price.
Broadcast major Astro Malaysia, Reliance Anil Dhirubhai Ambani Group and Eros International are also reported to be in the race for the Balaji stake. With markets extremely volatile in the last few weeks, Balaji share prices on the BSE have swung between Rs 156 and Rs 182. Therefore, analysts say it?s extremely difficult to predict a fair valuation for the deal. On Tuesday, Balaji stock closed at Rs 159.60, down nearly 5%, on the BSE.
In 2004, Star bought the stake in Balaji through affiliate Asian Broadcasting FZ-LLC (ABF) for Rs 123 crore. Regulatory approval enabled ABF to hold up to 26% following a public offer to the latter?s shareholders. Yash Khanna, VP, corporate communications, Star India, declined to comment. Sandeep Jain, CFO, Balaji, was not available for comment, either.
Arun Natarajan, CEO, Venture Intelligence India, said, ?The media & entertainment sector has been attracting a lot of PE firms in recent times.? Natarajan said that between January 2007 and June 2008, there have been approximately 32 PE investments in the media space, valued at $991 million.
Sources claim the promoters are unwilling to buy Star?s stake, even though they have first right of refusal.