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Balaji Telefilms’ talks with investors to dilute stake in ALTBalaji

MUMBAI: Balaji Telefilms had initiated preliminary talks with Zee Entertainment Enterprises Ltd (ZEEL) but no progress has been made since then, a source said.

The talks were not pursued because of valuation expectations. Balaji Telefilms is planning to sell stake in its OTT arm, ALT Balaji Digital Media Entertainment, but is also open to diluting in the parent company, which is listed, the source added.

ZEEL’s primary interest was in the OTT business. “The discussion was held before the resignation of Balaji Telefilms Group CEO Sameer Nair. The valuation expectation was high and there have been no talks since then,” the source said.

Balaji Telefilms has admitted that it is in dialogue with several financial and strategic investors who have expressed “strong interest” to partner with its OTT platform ALTBalaji. The company’s board will meet on 20 July to consider various fund raising options.

Balaji Telefilms, however, has not named the companies it is in talks with. The other names being floated are Reliance Jio Infocomm and an international studio.

“There has been no formal conclusion of any such investments by the board or shareholders for any such transactions,” Balaji Telefilms has said.

The statement was in response to a clarification sought by the stock exchanges from Balaji Telefilms on a report by BloombergQuint that the company may sell up to 26% stake in ALTBalaji.

“While the company regularly explores various synergic opportunities for expansion in the media business, there is no proposal relating to acquisition of any stake in ALT Balaji by the company,” ZEEL has clarified.

Balaji is planning to invest up to Rs 400 crore in ALT Balaji and is eyeing break-even in 3.5 years. ALT Balaji hopes to become profitable when it attains four million paid subscribers in India and abroad.

Last year, Balaji Telefilms had raised Rs 150 crore by diluting stake in the parent company to fund its OTT venture. It had made an allotment of 1,07,20,000 equity shares at Rs 140 each on preferential basis to Atyant Capital India Fund – I, Vanderbilt University, GH, GHI LTP, GHI HSP and GHI ERP for launching ALT Balaji. The company had diluted 14.1% equity in that transaction.

Balaji Telefilms’ current market capitalisation is Rs 1,456 crore. Shares of Balaji Telefilms have gained with the expectation that the company would be able to rope in an investor in its OTT arm.

ALT Balaji, which will offer 250+ hours of original content, has four key content areas—original shows, movies, kids and comedy. The OTT platform is expected to consume an annual expenditure of Rs 120 crore for the next three years with 80% of this expenditure going into content production.

In late May, the TV production house said that the management is actively considering the options available and has appointed Axis Capital as bankers for the investments.

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