HSBC Principal Investments, the private equity arm of the HSBC Group, has invested $60 million for a minority equity interest in Avitel Post Studioz Ltd, a Mumbai-based company providing post-production and related services to media and entertainment industry. The funds will be used by Avitel to finance its international growth and expansion plans.
“Leveraging its 35-year history of blending strong technical skills with an understanding of the media and entertainment sector’s needs, Avitel has developed proprietary know-how for archiving and restoration (A&R) and stereoscopy at a pace and cost level far superior to any of its competitors. In addition, we are very excited to partner with the Jain family and assist with their international expansion,” said Heath Zarin, MD and head of HSBC Principal Investments, Asia-Pacific, in an e-mail response to VCCircle’s queries.
Interestingly, the deal comes a year after Avitel raised ($10.64 million (Rs 50 crore) from Headland Capital’s Asia venture fund. Headland was spun out from HSBC Private Equity Asia Ltd last year.
Avitel is promoted by Pradeep Jain, and currently has a strong presence in the domestic post-production market, focusing both on feature film and advertising industry. Besides post-production, the company also offers film archiving and restoration services for clients in both domestic and global markets. Avitel has recently diversified into the animation market, and has a significant international presence, especially in Europe and the Middle East.
The company is headquartered in Mahim, Mumbai, where it carries out its CAD (Content Architecture & Development) operations, with its post-production operations carried out from its studio based in Juhu.
Avitel, which says it has a net worth of $150 million, also has a subsidiary located in Dubai Media City called APS FZ LLC, which caters to restoration and archiving business. According to Zarin, there are huge volumes of media libraries in need of archiving and restoration services, and the market is growing significantly each year. Avitel’s clients include Star India, Viacom18, Zee, NDTV, Eros, Mukta Arts and Red Chillies Entertainment, among others.
Avitel is also expected to benefit from the increasing demand for 3D content with the anticipated proliferation of 3D television sets. “Broadcasters will require 3D content for 3D-focused channels. This demand for content will be satisfied in part from new production and in part from conversion of existing 2D content into a 3D format,” added Zarin. He believes that with Avitel’s expansion into Europe and ultimately in the USA, besides the underlying demand in the Middle East, the company’s revenues and earnings will grow in multiples.
HSBC Principal Investments has recently invested in Hong Kong-based CS Logistics Holdings Ltd, an international logistics and freight forwarding services provider, to fund its acquisition of the UK-based logistics company Allport Group Ltd. It looks to invest between $50 million and $100 million across sectors and focuses on deal types such as growth financing, acquisition financing, pre-IPO deals, recapitalisations and secondary transactions.
“Our deal flow in India has been particularly strong, consisting of leads generated internally and externally. Within Asia, India and China are our two largest focus markets,” said Zarin.