MUMBAI: The Foreign Investment Promotion Board (FIPB) has finally cleared a proposal for Star Group's acquisition of up to 26 per cent stake in Balaji Telefilms Ltd.
Government sources confirmed that the board has cleared the proposal, which was listed as an additional item for FIPBs meeting earlier this month. As per government rules, Star had also obtained a "no objection" certificate from its Indian joint venture partner in the yet to take off Space TV direct-to-home venture for making this investment in Balaji.
Star Group affiliate Asian Broadcasting FZLLC (ABF), the "foreign collaborator" according to government documents, could have a maximum shareholding of up to 41 per cent, subject to future shareholding alignments.
As per an extant policy, 100 per cent foreign direct investment (FDI) is allowed in the production of television software under the automatic route.
Balajis share on the Bombay Stock Exchange ended on Monday at Rs 99.05 after opening for the day at Rs 101.00.
Now that the FIPB has cleared the proposal, a final green signal from the finance minister remains a matter of routine. However, before that happens, Star cannot make an open offer, which is a necessity as per regulatory guidelines.
The open offer is directed to be made by ABF to the shareholders of the production major for acquiring a 20 per cent stake in India's leading content provider at a price of Rs 90 share aggregating Rs 1173.8 million payable in cash.
The open offer would be for 13,042,089 fully paid up equity shares of Rs 2 each; representing 20 per cent of the voting post issue equity capital of Balaji at a price of Rs 90 per share.
The Balaji proposal, cleared on 10 December by the FIPB, was earlier deferred twice. One of the reasons being the nodal ministry for media-related investments, information and broadcasting ministry, had not got back to the FIPB with its comments.
Interestingly, the Rupert Murdoch-controlled Star Group is the only foreign broadcaster that has sought government approval up till now to invest sizably in Indian production houses. Earlier, Star's parent News Corp had picked up about 14 per cent stake in UTV, which bought back the holding some time back. Sony Entertainment TVs intent to buy into SAB TV, the Sri Adhikari Brothers controlled production house, still remains an intent, at least officially.
