Blackstone-Eenadu deal in limbo

CHENNAI/ HYDERABAD: The $465 million investment by private equity major Blackstone in the Hyderabad-based Eenadu Group is in a limbo as the deal's deadline is only a couple of days away and is yet to get the nod of Foreign Investment promotion Board (FIPB). The deal's life as per original agreement entered into in January 28, ends on December 31, 2007, which is only a few days away.
Sources at Blackstone Advisors India Private, who declined to be named, confirmed to The Times of India that the FIPB was yet to clear the deal.“As of today we have not got the approvals. I do not want to speculate on the fate of the deal. Maybe, we may consider to extend the timeline and see if we can get the approvals. As per the terms, the deal is valid till December 31, 2007,” he said. Ramoji Rao could not be reached for a comment.
It was in January this year that Blackstone announced that it had signed an agreement with Ushodaya Enterprises (part of the Hyderabad-based Eenadu group) wherein Blackstone would acquire a stake in Ushodaya besides have representation on the board of the company.
As part of the transaction, Ushodaya was raising $465 million (approximately Rs 2,000 crore), comprising of $275 million investment by Blackstone and $190 million in bank financing. The transaction was subject to regulatory approval by FIPB and Ministry of Information and Broadcasting.
Ushodaya owns leading Telugu language newspaper - Eenadu and ETV - a private television broadcasting network. ETV runs regional language general entertainment and news channels. It has a footprint across Telugu, Bengali, Oriya, Kannada, Gujarati and Marathi languages. The parent company of Ushodaya, owns Ramoji Film City which is Asia's largest studio.
When the deal was signed, Akhil Gupta, chairman and managing director of Blackstone India had said that Ushodaya was an ideal platform for Blackstone to play the highly attractive media sector, which according to him, would be a key beneficiary of a secular trend in growth in personal consumption that is driving India's economic expansion.
For private equity investor, this was its first investment in the media space. It recently concluded a buy-out of India's largest garment exporter, Gokuldas Exports where it invested around $165 million for a majority interest. Besides, it closed another buy-out of Intelenet, the BPO promoted by HDFC and Barclays, for around $200 million.