MUMBAI: Sony Entertainment Television India has deferred the acquisition of sister company SET Singapore as its proposed initial public offering (IPO) is unlikely to happen for at least a year.

The decision to put off restructuring of the holding was taken because it would have attracted capital gains tax. "As the IPO is not happening now, we have decided to put on hold the buying of SET Singapore. The proposed restructuring transaction would have attracted capital gains tax," says a company source.

SET India had obtained clearance from the Foreign Investment Promotion Board (FIPB) to acquire 100 per cent shares of SET Singapore through a share swap transaction. According to the proposal, one share of SET India was to be exchanged for 16 shares of SET Singapore. Post-restructuring, 60.65 per cent of the SET India equity would be with the Sony Pictures Entertainment (SPE) entities, 19.83 per cent with non-resident Indians and overseas corporate bodies, 7.68 per cent with foreign institutional investors and 11.84 per cent with Indian shareholders.

SET India's proposed IPO is also on hold, the source says. SET India CEO Kunal Dasgupta, however, refused to comment on the issue. The company has long been weighing the option of going for an IPO.

According to the source, Dasgupta had made a presentation to Sony Pictures Entertainment (SPE) chairman and CEO Michael Lynton a few months ago on SET India's growth prospects. In his presentation, he had listed an IPO as one of SET India's plans. "SPE's new CEO had called for presentations from its different entities. A few months back, Dasgupta earmarked SET India's growth plans as including an IPO," says the source.

SET India plans to acquire SET Singapore and consolidate operations before going in for an IPO. SET Singapore has invested in acquisition of television serials and Hindi feature films, besides ICC telecast rights for India and other parts of Asia till 2007, including two World Cup tournaments. In its FIPB application, Sony had said: "All major investments of SET Singapore are now close to maturity and are likely to become profitable in the near future. The benefits of these investments would accrue to SET India in the coming years through the process of consolidation. This will increase SET India's valuation."

The consolidation process, according to the source, will start only when SET India is more definite on when it is going to launch its IPO.