Specials

Media sector stitches 45 private equity deals in 2007



















MUMBAI: It has been a landmark year for the media and entertainment sector. A spate of 45 private equity deals have dotted the landscape in 2007 while one company has raised money through an initial public offering.


"It signals the coming of age of not only the media sector but also the companies. Indian promoters have taken their outfits to a scale where even Walt Disney and Time Warner have gone ahead to do equity deals with them," said ICICI Securities SVP Ravi Sardana.


The market cap of the media companies has touched $15 billion. "The media and entertainment sector, which is at Rs 500 billion, is expected to double in the next 4-5 years. This is something which is exciting investors," said Sardana while addressing a session at Ficci-Frames 2008 on "Raising Capital: Showbiz attracts the moolah."



The business has also become scalable with the opening up of multiple platforms. "There are lots of markets in India which are still under penetrated. Media companies can expand their business by entering into new geographies," Sardana said.


The missing segments in the piece are movie companies, animation and new platforms like IPTV. The sector also needs to consolidate and make structural changes for making it more attractive for equity capital infusion, Sardana said.



The challenges are shortage of talent and scaling up. "In India largest production houses do less than four movies a year. In Hollywood, the big six studios account for 90 per cent of the US and Canada box office," said Sardana.

Expressing bullishness on the sector, Blackstone chairman Akhil Gupta said that 65 per cent of India‘s GDP is personal consumption while in China it is 45 per cent. "That is where the Indian story gets stronger. There is scope for growth in advertising revenues," Gupta who heads the private equity company in India said.

Banks have extended funding for film projects, though it is open only for producers who have a track record. Exim Bank has extended loans close to Rs 3 billion and has supported 11 production houses. "Our experience has been good. We have had NPA (non-performing asset) of just Rs 1 million," said Exim Bank chief general manager John Mathew.



New financing options are also possible including financing equipment, airtime sales, acquisition of library content and distribution and merchandising, said Amarchand Mangaldas managing partner Shardul Shroff.

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