New Delhi: Investor George Soros has acquired a 3% stake in Reliance Entertainment Pvt. Ltd, the diversified media company that is part of the Reliance- Anil Dhirubhai Ambani Group for $100 million (Rs395 crore), according to a spokesperson for the latter.
Executives at Soros Fund Management Llc. could not be immediately reached for confirmation.
The announcement of the deal, which values Reliance Entertainment at $3.3 billion (Rs 13,035 crore), comes in the wake of media reports on Thursday that the company had hired investment banks in the run-up to an initial public offering (IPO) of shares.
This is Soros’ second investment in the Indian media and entertainment sector in less than two months. On 14 December 2007, his Quantum Fund paid around Rs84 crore for a little more than 0.5% in SunTV Network.
The deal values Reliance Entertainment, 100% owned by Anil Ambani, in the same league as SunTV Network (Rs13,046 crore on the basis of the stock’s closing price on Thursday) and Zee Entertainment Enterprises Ltd (Rs11,160 crore).
Analysts are not sure whether the deal will help the cause of Reliance Entertainment’s IPO. “It is a kind of benchmark, but if they were to come out with an IPO, institutional investors will go by the valuation of their analysts, not by what Soros paid,” said an analyst with a leading Mumbai brokerage, who did not want to be identified because he is not authorized to speak to the media. “The valuation is not surprising, as they (Reliance Entertainment) have made a string of acquisitions, but not much can be said unless more financial details on the company are known,” he added.
Reliance Entertainment is present in three businesses: Internet and new media; film entertainment; and television broadcasting. The company owns gaming portal Zapak, social networking site BigAdda, movie rental business Big Flicks, film production facility Nitin Desai Studio and Adlabs Films Ltd.
However, Adlabs, though part of Reliance Entertainment’s stable, is not part of the deal, the Reliance Entertainment spokesperson said. Adlabs is a publicly listed company involved in film production and distribution business.