Tuesday, July 22, 2008

UEL (Eenadu Group)

UEL (Eenadu Group)

Investor: Blackstone Group

Investment Value: $275 mn

UEL Chairman Ramoji Rao was quoted as saying that “the company had several financing options, including an initial public offering, but we went with Blackstone because we wanted to leverage the group’s experience and track record in the global media sector, and which has holdings in some of the fastest-growing media firms in the world that include Sirius Satellite Radio, VNU, CineWorld and Universal Orlando.” No doubt, a good decision by UEL, as the industry where the group is dominant has definitely changed over the last few years. Due to increased competition, margins of Eenadu Group have eroded. And, therefore, a capital infusion seems quite timely for the company.

Amidst the deluge of PE investments into the Indian telecom and realty sectors, Indian media was definitely not a silent viewer. It got its fair share of PE attention when Blackstone, the world’s largest leveraged-buyout firm, pumped in $275 million into Ushodaya Enterprises Ltd. (UEL) to pick up a 26% stake in the Eenadu Group that owns the leading Telugu daily Eenadu and one of the largest private television networks in the country, ETV. However, according to sources, Blackstone has subsequently reduced the size of the planned deal and, under the amended terms, it is looking at a 14% stake for Rs.590 crores or a little less than $150 million in UEL – all due to hurdles in obtaining the green signal from the Foreign Investment Promotion Board. But, according to latest reports in leading news dailies, Blackstone has succeeded in getting the Finance Minister P. Chidambaram to formally sign on a revised deal to invest around $150 million in UEL. It seems that the deal is finally taking shape.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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