Two private equity (PE) players, Standard Chartered Private Equity and Providence Equity Promoters, may jointly invest $200 million in Multi Screen Media (MSM) India, earlier known as Sony Entertainment Television (SET) India.
The deal includes a buyout of 32 per cent held by Bollywood actor Jackie Shroff and three others, and infusion of funds as fresh equity. Sony’s US-based parent, which holds 61 per cent in MSM, will also bring in funds. According to investment bankers privy to the development, the deal is likely to be finalised by the end of this month.
The balance capital in MSM is with another private equity investor, Capital International of Japan.
MSM’s valuation has dropped over the past year as Sony’s bouquet of television channels came down on the popularity charts. A year ago, MSM had an enterprise valuation of $600 million; this has now dropped to between $400 million and $450 million.
MSM India’s network includes SET (the flagship Hindi gebneral entertainment channel), SET Max (cricket and Hindi movie channel), Sab TV and SET Pix. A senior official of Standard Chartered Bank, which is advising the four investors on the deal, confirmed the drop in valuation. A lower valuation will mean that the existing stakeholders will get up to $50 million less than what they could have fetched a year back.
The company has around $150 million in debt, according to one of the PE investors. However, these figures could not be independently verified with MSM. This is the third attempt by the four investors Shemaroo Films managing director Raman Maroo, MobiApps Holdings’ Jayesh Parekh, World Media group director Sudesh Iyer, besides Shroff, to sell their stake in MSM.
In November, a British PE company, Ashmore, was close to signing a deal with them at an enterprise value of $600 million. However, the deal, delayed by the terrorist attacks in Mumbai, eventually fell through, said an official close to the company.
The Carlyle group, which was keen to buy a minority stake in the company, exited the race for want of clarity on the deal.
According to two people familiar with the new deal, issues such as the right of minority stakeholders as well as an exit route — if the proposed initial public offering (IPO) did not take place — are still under discussion. A PE company associated with the deal process, told Financial Chronicle that the terms and conditions appeared sketchy on whether the new stake holder would get adequate board representation and a say in the functioning of the company. Also, Sony had not elaborated on the possible exit routes that the new stakeholders could exercise, he said.
Jaideep Ghosh, head of travel & leisure with KPMG’s analysis wing, said, “Valuations are more realistic now, having come down due to both external and internal factors.” MSM India has seen it valutation drop gradually from $2.5 billion in 2000. According to him, Sony TV, part of the MSM bouquet, has slipped to number four in the general entertainment channel category; and Sab TV and SET Max haven’t scorched the small screen eitgher.
Source: My Digital FC