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Foreign investments made into Indian music companies & vice-versa

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The Indian music industry grew 25% to INR 1068 crores in 2018. Currently, the Indian music industry is ranked 15th in the world but by 2022, India could very well break into the global top 10. This means India is one of the better-performing countries in the music business. But are international investors bitten by the Indian bug?

 

Gaana

In 2018, it was reported that Tencent has invested $115 million in Gaana. This music streaming app is backed by Times Media, a company that is closely associated with The Times of India Group.

Perhaps Tencent agrees with the vision of Gaana of providing music to 500 million Indians. At the time of securing the investment from Gaana, Prashant Agrawal, CEO of the music streaming company said that his company had achieved just 10% of its vision. This ambitious plan of expansion could sure leverage the handsome fundings.

This is the first time Gaana has secured outside investment. So far, its primary investor had been Times Internet. With an international firm coming on board for its investor panel, Gaana could soon be pitching for more.

 

Saavn and Tiger Global

Much before Gaana received its investment, Saavn had created waves in 2015 by securing a $100 million C series funding from Tiger Global. According to various sources, this company had planned to use these funds to scale up its operations and venture into the audiovisual medium. With podcasts and more audio apps jamming the scene, this may seem like an upstream approach. What it has in store will soon be out for the public to view!

In March 2018, Saavn announced its partnership with Jio Music aligning their operations to create an integrated music identity- SaavnJio. As part of this deal, Jio ( part of Reliance Industries Limited) announced that it was buying Saavn’s stake worth $104 million from its promoter At present, Saavn is owned by Liberty Media, Bertelsmann, Tiger Global, and its promoters- Paramdeep Singh, Vinodh Bhatt, and Rishi Malhotra. It was decided by Jio and Saavn management that the former would continue to be run by the promoter

Jio also announced that it would invest $100 million out of which $20 million would be utilized to develop the OTT platform of Saavn.

After this announcement by Jio, the combined valuation of SaavnJio was calculated at $1 billion which is an astonishing figure indeed and is enviably larger than most international platforms. It is no surprise the desi brand racked in huge global funds.

But what value do both these players bring to the table? Well, Jio is known for its connectivity and reach, while Saavn is known for its expertise in music streaming. Jio Music is also a very strong player in the Indian music streaming space. At the time of signing this strategic transaction, Jio Music had a library of 16 million HD songs from 20 Indian languages. Saavn is a leading music streaming player in South Asia and has partnered with YRF, Saregama, T-Series, Eros, Universal, Sony, and Warner Music.

The combined entity aims to target 1 billion subscribers in India and also plans to expand its footprints in the United States, UK, Canada, UAE, Singapore, and other countries.

 

The case of Shemaroo

One of the earliest music companies that attracted foreign investment was Shemaroo Music. In January 2015, Foreign Institutional Investors acquired 3.2% stake amounting to 886,270 shares. As a result, the stock price of the company jumped up to INR 285.

The investment rally was led by Tarra Fund that purchased 175,000 shares of the music and entertainment company. The other FII that picked up shares of Shemaroo was Copthall Mauritius Investment (700,000 shares approximately).

 

Spotify

Another music streaming app that entered the Indian market via foreign investment was Spotify. This Swedish music company invested INR 48 crores in 2019 to enter the Indian music market. Spotify has free as well as premium plans and has impacted the Indian market deeply.

 

Foreign investment in Private FM

The Indian music industry also comprises players from the private FM space. Most of the content belted out from these radio stations is in the form of music.

As early as 2004, the Indian government had relaxed the rules of foreign direct investment in the Indian private FM industry. Following this development, the Indian private FM industry was expecting an investment of INR 200 crores from foreign players in 2005-2006.

In 2006, HT Media Ltd announced a tie-up with Virgin Radio, a subsidiary of Sir Richard Branson’s Virgin Group. This group runs its radio operations in Thailand –four of them in Bangkok. This was the second foreign investment in the Indian FM space after Star India Ltd floated Radio City in 2002.

To summarise, survival in the intensely competitive Indian market, music companies need external investments. Saavn, Shemaroo, and Gaana, despite being in the music industry for quite long, have had to depend upon investments. As more and more Indians download and install music apps, streaming companies will have to keep scouting for infusion of funds.

 

 

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Akanksha Holani

Author: Akanksha Holani

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