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February 12, 2007

Blackstone's $275-M investment in Ushodaya

Businessworld has more details on the Blackstone Group's mammoth $275 million (over Rs 1,200 crore) investment commitment - in return for a 26% stake - in Hyderabad-based, Ramoji Rao-promoted Ushodaya Enterprises (UEL).
UEL is a notoriously closed company and Rao was, till we last met him, a major opponent of foreign money in media. So, there is delicious irony in the fact that the Blackstone-Eenadu deal is, probably, the single largest media deal in India, so far. The last big one was the Rs 360 crore Reliance-Adlabs in 2005.

The Rs 752-crore (March 2006) Hyderabad-based UEL owns most of the Ramoji Group’s publishing business (the Telugu Eenadu and magazines), its 12 TV channels and Priya Foods (its pickle business). Ramoji Film City, however, is not a part of UEL.

Blackstone has a five-year horizon on the UEL investment and expects returns to be in the mid-20s. “It could take longer because India is an emerging market,” says Akhil Gupta, senior managing director and chairman, Blackstone India. He expects Eenadu to be a stepping stone to more deals in media. Blackstone started talking to UEL about six months ago because “they are very interested in the regional media story”, says G. Srinivas, company secretary, UEL. The company, he explains, will use the money for ‘consolidation and restructuring’, and expansion, including the acquisition of Usha Kiron Movies, its TV software production arm (ostensibly from Rao himself) by UEL. The ‘expansion’ bit for now will focus on TV, the business that Srinivas reckons is growing faster than print. On the print side, Eenadu has no plans of venturing out of Andhra Pradesh for now, says Srinivas.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.