Mumbai, July 18: Anil Ambani-led Reliance MediaWorks will raise Rs 605 crore by selling a minority stake to a foreign private equity player to expand its film and media services division and bring down debt.
The film and entertainment services company, however, did not reveal the identity of the PE player or the percentage of stake that will be offloaded.
In a statement, Reliance MediaWorks said it had signed a term sheet with an international PE fund in terms of which the potential investor had provided an indicative non-binding proposal to acquire a "substantial minority stake" in its film and media services division for an investment of Rs 605 crore.
The two parties have agreed to exclusivity for the next 90 days. The proposed investment is subject to completion of customary detailed due-diligence, definitive documentation, completion of subsidiarisation of the film and media services business and necessary approvals, the company said.
News of the deal sent the company scrip up 5.51 per cent, or Rs 3.25, to Rs 62.20 on the Bombay Stock Exchange.
Shares of the company opened on a bullish note and further gained 12.24 per cent to Rs 66 on the National Stock Exchange.
The film and media services division of the company includes a host of services such as motion picture processing, digital lab service to equipment rentals and other creative services such as conversion of 2D movies into stereoscopic 3D and animation.
Earlier this year, Reliance MediaWorks had approved the establishment of its exhibition and film and media services businesses into separate 100 per cent subsidiaries to enable the company to expand the businesses, revenues and profitability.
The company had said that the step to subsidiarise was also a precursor to invite strategic and private equity investors who had expressed a keen interest in investing in the specific businesses.
In the film and media services segment, the firm is now planning to grow through strategic alliances and capacity expansion. At present, it plans to strengthen its presence in the southern states, particularly in Tamil Nadu and Andhra Pradesh through alliances.