Blackstone in Indian media deal

The private-equity firm acquires a 26% stake in Ushodaya Enterprises for $275 million.
Blackstone's investment of $275 million in Ushodaya Enterprises, its largest India private-equity deal to date, is also the largest private-equity deal in IndiaÆs media sector. As part of the transaction Ushodaya will arrange $190 million of bank financing taking total new capital raised to $465 million. The money will be deployed to expand Ushodaya's existing media businesses.

Sources close to the deal said Blackstone would acquire a 26% stake in Ushodaya and get proportionate representation on the board whose constitution is yet to be finalized. None of the Ramoji Rao group companies are listed and no financial information for Ushodaya Enterprises was disclosed.

Ushodaya Enterprises was set up over 30 years ago as part of the Hyderabad-based Ramoji Group. UshodayaÆs newspaper Eenadu sells more than a million copies daily, making it IndiaÆs third-largest circulated newspaper. The companyÆs television business, Eenadu TV, is the fourth-largest private TV broadcasting network in the country operating 11 channels across eight languages. Ushodaya also develops content under the name Ushakiron Television for the entire TV network, and Ushakiron Movies, which produces Hindi, Telugu, Kannada, Marathi and Bangla movies, with an emphasis on family viewing. Ushodaya also has a film distribution business.

Ramoji GroupÆs most highly publicised recent venture was Ramoji Film City, AsiaÆs largest studio spread across 1666 acres, one of the most comprehensive studio complexes in the world offering production and post production facilities and services for up to 14 movies simultaneously. The film city as well as the hotels the Ramoji Group operates are outside the purview of the transaction.

Akhil Gupta, chairman and managing directorat Blackstone Advisors India says, ôWe believe that the Indian media sector will be a key beneficiary of a secular trend in growth in personal consumption that is driving IndiaÆs economic expansion which in turn will spur advertising growth. Importantly, we believe that Ushodaya Enterprises is an ideal platform for Blackstone to play this highly attractive sector in India.ö

Analysts commented that the deal reinforced the growing importance of regional language television in India. With English and Hindi penetration at higher levels, most analysts predict the exponential growth in viewership in the future will be in regional language programming. Also, for Indians living overseas, regional language programming is often the first choice.

This is BlackstoneÆs second private equity investment in India following $50 million it invested in Emcure Pharmaceuticals in mid 2006. Blackstone opened its Mumbai office in May 2005.

Kotak Investment Banking was sole advisor to the deal.
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