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Mukesh Ambani’s RIL to acquire 24.9% stake in Balaji Telefilms for Rs 413 crore

MUMBAI: Mukesh Ambani-controlled Reliance Industries Ltd (RIL) has agreed to acquire a 24.92% stake in Balaji Telefilms Ltd (BTL) for Rs 413.28 crore. The deal will give RIL a television content company, a movie production business and, above all, an over-the-top (OTT) business in ALTBalaji. 

RIL already has a presence in all these business lines. Colosceum, however, is a small production house compared to Balaji Telefilms. The OTT platform, Voot, is under Viacom18, a 50:50 joint venture between TV18 and Viacom. 

As per the deal with Balaji Telefilms, RIL will get 2.52 crore equity shares through preferential allotment at Rs 164 apiece, aggregating to Rs 413.28 crore.

With the stake purchase falling below 25%, RIL will not have to make an open offer to buy shares from public shareholders. 

RIL said that this investment in content production including digital content is in line with its commitment to invest and grow in telecom, digital and media businesses. The company already owns Network18 and TV18, which it acquired from Raghav Bahl three years ago. 

The deal will help ALTBalaji to compete with other OTT service providers, including Indian and global majors like Netflix and Amazon Prime Video. The space has seen intense activity and has television networks like Star India, Sony and Zee having their own OTT platforms in the form of Hotstar, Sony Liv, Ditto TV and OZEE.

Along with the earlier deal, Balaji Telefilms will now be armed with around Rs 520 crore to push its OTT business. The company had raised Rs 150 crore last year, out of which it has spent around Rs 40 crore.

The proceeds from the new transaction would be utilised to further speed up content development initiatives, especially for ALT. 

“This transaction marks a landmark event for the Indian OTT industry and is expected to further accelerate the growing trend of media consumption on the go,” Balaji Telefilms said in a statement. 

Reliance Jio will use ALTBalaji to further penetrate the market. It has already shaken up the telecom market and has around 100 million subscribers. 

The transaction is expected to be completed in 45–60 days, subject to shareholders’ approval and regulatory compliances and other conditions. 

RIL said that the investment would not fall within related party transactions, and none of RIL’s promoter, promoter group or group companies have any interest in BTL. No government or regulatory approvals are expected to be required for the investment. 

The transaction was approved by the board of both the companies at their respective meetings today. 

Balaji is India’s leading entertainment content producer operating across television, movie and digital platforms. The company recently launched ALTBalaji, a multi-device subscription video-on-demand platform that offers original, premium and exclusive content for a global digital audience. In a short span since its launch, the platform has garnered over four million downloads across 80 countries. 

RIL has made a significant contribution towards creating a digital revolution in India by providing high-speed data on handheld devices at extremely competitive price, thereby helping to create an environment ripe for ALT’s success. This investment will give strong impetus to the company’s focus on becoming India’s content powerhouse. 

Commenting on the transaction, Balaji Telefilms chairman Jeetendra Kapoor said, “We welcome Reliance Industries Ltd as a partner in our growth journey towards becoming the preferred content producer for the Indian diaspora across all means of video consumption and across all geographies. This investment is a vote of confidence to the company’s strategic move to own our IP and our viewers. I would like to congratulate Ekta and the entire Balaji team on this early success, and am sure that they will continue to take the company forward from strength to strength. I would also like to thank Axis Capital for its valuable and unwavering support over the years. They have visualised and facilitated this important investment which will help us become one of the leading content players globally.” 

Axis Capital acted as the sole investment banker for this transaction. 

BTL was incorporated on 10 November 1994 and its equity shares are listed on the BSE and NSE. The company has paid-up share capital of Rs 15.2 crore (as on 31 March 2017) and generated turnover of Rs 421 crore, Rs 293 crore and Rs 347 crore in FY17, FY16 and FY15, respectively.

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