Global private equity player Blackstone Group has reworked its investment proposal and will now invest less than Rs 600 crore (Rs 6 billion) in Ushodaya Enterprises, the company that owns leading South Indian newspaper Eenadu.
Sources said the reworked proposal was submitted to the Foreign Investment Promotion Board recently, in which the private equity major now proposes to pick up around 14 per cent stake (as against the earlier 26 per cent for Rs 1,081 crore).
It is likely that Ushodaya Enterprises will rope in some Indian investors to pick up a stake in the company, possibly not more than 12 per cent.
It is also likely that noted NRI businessman C Sivasankaran, who has several business interests in the country, may also invest in the company.
The reduction in Blackstone's investment would obviate the need for the proposal to be vetted and cleared by the Cabinet Committee on Economic Affairs (CCEA). As part of existing Government policy, all proposals which have a foreign direct investment of over Rs 600 crore have to be finally approved by the CCEA.
The reworked proposal has not been listed as yet for deliberation at the forthcoming FIPB meeting scheduled for January 10.
Sources added that Blackstone's new proposal will be vetted at the FIPB itself, a process that should speed up approval. There is a sense of urgency surrounding the deal and the parties concerned are keen to wrap up the deal by February.
As per the original proposal, announced last January, Ushodaya planned to raise $465 million, with Blackstone investing $275 million and $190 million raised through bank financing. The deal was stuck for nearly a year on account of several objections raised to the proposed transaction.
Questions were raised on whether a promoter can use the proceeds after selling equity in a media company to foreign investors to pay off liabilities in another company owned by them. A leading Congress (I) MP has been consistently critical of the proposal, waging a sustained letter campaign against the deal.
Ushodaya is owned by the Ramoji Group, promoter of Ramoji Film City on the outskirts of Hyderabad in Andhra Pradesh.
Ramoji Rao, chairman of UEL, had then said: "The company had access to several financing options, including an IPO, but we decided to go with Blackstone because we believe that at this stage of our growth, we have an opportunity to create significant value by leveraging Blackstone's experience and track record in the global media sector."