Dec 26, 2008

Business - Media and entertainment a hit with PE investors

Reghu Balakrishnan

Mumbai: The media and entertainment sector has witnessed a number of private equity (PE) deals in the month of December, despite a general slowdown in private equity investments in the country. Canaan Partners, Nalanda Capital and Altima India have invested in the sector in December, and more deals are in the offing, say industry watchers.

Among done deals, Singapore-based Nalanda Capital picked up a stake in Kalanidhi Maran's Sun TV Network Ltd for Rs 100 crore; Asian hedge fund Altima India Master Fund picked up 14% in The Indian Film Company, while Bollywood portal has raised an undisclosed amount from Canaan Partners.

The Indian entertainment and media industry is estimated to touch Rs 1,15,700 crore by 2012 with a compounded annual growth rate of 18% between 2008-12, according to a recent report by Ficci and PricewaterhouseCoopers. For 2007, the report pegged the size of the TV industry at Rs 22,600 crore, print media at Rs 14,900 crore, filmed entertainment at Rs 9,600 crore and radio at Rs 620 crore. Harish Gandhi, executive director, Canaan Partners, said, "The sector is always an attractive opportunity for investments as the Indian youth's spending capacity on entertainment is growing."

Mounting investment in Indian films, which is at times more than investments in Hollywood movies, is a clear indication of the ongoing growth of the industry, he added. Bollywood, valued at $12.5 billion, is the world's most productive movie industry with more than 1,000 releases a year. Though the number of PE deals in media and entertainment this year is less as compared to last year, experts and investors are hopeful that more deals will be struck in the near future. About 20 deals have been struck in 2008 as against 32 deals last year.

According to Arun Natarajan, the media and entertainment sector will benefit hugely once the downturn reverses. "For the last couple of years, the sector was attractive to PE investors, along with other consumer spending sectors such as FMCG. The sector continues to grow even amidst the downturn," he noted.

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