Global Economics

Bollywood Beckons Private Equity


The time is right for mutual funds to invest in India's growing entertainment industry. Global giants such as Disney and Viacom have shown interest

To cash in on the bullish growth of entertainment and media (E&M) industry in the country, financial institutions are rolling out a slew of mutual funds focusing on these spaces.

According to a report by PricewaterhouseCoopers and Federation of Indian Chambers of Commerce and Industry (FICCI) the E&M industry recorded a growth of 17% over the previous year, against the projection of 15%.

Equity majors like Blackstone, Temasek, Warburg Pincus, Goldman Sachs, T Rowe Price, Lehman, DE Shaw are key investors in the sector.

"Given this growth, it may be the right time for such funds. Many of these funds cover a wide range of areas within the entertainment arena such as retail, shopping malls, mobile content providers lifestyle beyond the conventional media like television, film, print advertising and multiplex,'' said Jaideep Ghosh, director, KPMG Advisory Services.

Asset management companies (AMCs) do have thematic funds focusing on select sectors. Mutual funds on entertainment industry are relatively new to India. Sundaram BNP Paribas Mutual and Reliance Mutual Fund have launched funds that are focused on entertainment and media industry.

Religare with Vistaar Entertainment Ventures recently has launched, a film fund aimed at financing films in the country and overseas. In the first round it will have a corpus of Rs 200 crore. Pyramid Saimira is also said to be launching a similar fund in the country.

"We're seeing emergence of new kinds of businesses and entertainment. Funds like this will ensure people's participation in the growth story and provide them an opportunity to invest in funds rather than direct investment in equities,'' said Sunil Subramaniam, executive director (sales & marketing) of Sundaram BNP Paribas Mutual.

Wealth managers feel investing in these sectors can result in high growth if invested long term. "It can be pretty volatile as the industry is not mature. So long term investment is suggested in these spaces," said Anil Rego, CEO of Right Horizons.

Significant investments are expected in E&M sector from domestic and overseas players. Global media giants like Viacom, Walt Disney, BBC, J C Decaux and Astro are already in the country or looking at it. The industry has already witnessed deals such as Walt Disney-UTV, Blackstone-Eenadu and Adlabs-ADAG (Anil Dhirubhai Ambani Group).

The number of mutual funds are on the rise here. Currently, there are 34 players in the industry, while the number is expected to cross 50 in the next couple of years. The country's mutual fund sector is expected to grow at a CAGR of 30% for the next 10 years.


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