Tata Play May Soon File DRHP For IPO Soon, Disney Likely to Offload Stake

Tata Group and The Walt Disney India – the joint venture partners of Tata Play (erstwhile Tata Sky) – is considering going for an initial public offering (IPO) to raise Rs 3,200 crore. Tata Play is likely to file the draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) by the end of this month.

The leading direct-to-home (DTH) platform has already appointed Kotak Mahindra Bank as the lead banker and Cyril Amarchand Mangaldas (CAM), one of India’s largest corporate law firms, to advise on the IPO and subsequent listing, sources told ET.

Disney India is expected to sell its 10 per cent stake in direct-to-home (DTH) player Tata Play. Citing unnamed sources, Business Standard reported that Disney has about 30 per cent stake in Tata Play, which is India’s largest DTH operator. Plus, India is the only market where Disney has an investment in a distribution platform, and it got the stake after the acquisition of Rupert Murdoch’s 21 Century Fox in 2019.

Disney holds a 20 per cent direct and 9.8 per cent indirect stake in Tata Play. Experts are of the view that the company likely to offload approximately 10 per cent stake in Tata Play to comply with cross-holding rules in the media. Although 100 per cent foreign direct investment (FDI) is allowed in DTH, there is a 20 per cent equity limit for broadcasters investing in DTH companies.

Among other investors in Tata Play is private equity firm Temasek, which has made investments via its subsidiary Mauritius-based Baytree Investments. Baytree owns a 10 per cent stake in the company. The Tata group, which holds 60 per cent stake in Tata Play, has reduced its stake by 20 per cent over the years, and the major shareholders of the Tata group include Tata Sons and Tata Capital.

According to the business daily, a Tata Play spokesperson said the company had no comment to offer on the matter.

Tata Sky started its services in 2004 as an 80:20 joint venture. The company was a venture between Tata Sons (owning 70 percent of the stake) and Rupert Murdoch’s 21st Century Fox (owning 30 percent). Singapore-based Temasek Holdings purchased 10 percent stake in the company in 2008 from Tata Sons, and The Walt Disney Company purchased 21st Century Fox’s stake in the company in March 2019.

“Work on the IPO had started last year but was put on the back burner for a while as the company undertook a rebranding exercise and the markets too started to look difficult in the early part of the calendar year. However, work on the draft red herring prospectus (DRHP) was restarted recently and efforts are in full swing to file the DRHP by end of this month,” Mint reported citing a source.

Tata Sky, the direct-to-home (DTH) company, rebranded itself in January this year as Tata Play to expand its television-cum-OTT (over-the-top) offerings in combined packages.

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