3i has completed the largest ever private equity deal in the Indian media and entertainment industry by investing US$45m in Nimbus Communications Ltd (NCL). Based in Mumbai, NCL is India's only company with a business mix of media, entertainment and sports. It has four business lines - television, sports, motion pictures and digital content.

A multi-faceted company
NCL was founded by Harish Thawani in 1987 as an advertising company. Thawani used the experience he gained working for large agencies to set up his company selling air time. The liberalisation of the India media sector in the early nineties enabled NCL to enter the production space. Today NCL produces TV programmes for many of the largest broadcasters in India, including the state broadcaster Doordarshan, and the commercial cable and satellite broadcasters Sony, Zee, Sun and Sahara.

In 2001, NCL entered the sports rights management market when it was invited by Newscorp to promote the Cricket World Cup. Aside from managing the commercial rights of this event, NCL also handles the marketing for the A1 Grand Prix World Cup of Motor Sport and Afro Asia Cup cricket.

Over the past three years NCL has moved into the mobile content services and film industries. The company owns a state of the art facility in Mumbai dedicated to mobile content services and provides a range of services to telecommunications firm Hutchison. Nimbus Motion Pictures was launched in 2001 and has just completed its first mainstream Hindi film production.

Authentic investment
3i was attracted to investing in NCL because it was impressed by Thawani's business acumen and the track record of his management team. It also recognised that NCL was operating in a rapidly expanding market.

According to KPMG, the Indian entertainment industry is worth US$5bn and is expected to grow to US$13.5bn by 2010. The industry's growth is being fuelled by the country's economic growth, rising income levels, demographic shifts, and an increasingly global demand for Indian content.

Internationally connected
3i found out about the opportunity through Digvijay Singh, CEO of NCL's sports division, and a personal acquaintance of Anil Ahuja, managing director of 3i Asia, in May 2005. despite keen competition from other private equity houses, 3i was selected because of its in-depth knowledge of the global media and sports sector and the breadth of its European  network. The deal was completed in only three months.

NCL wants to produce more films that appeal both to Indian and Western audiences and is examining film development opportunities in Europe. During the pitch process, David Noble, 3i's media sector advisor, gave Thawani a detailed overview of trends in the European media industry. This presentation convinced NCL's founder that 3i would actively support his expansion plans in India and Europe.

Thawani said: "3i was able to combine its global media expertise and local execution skills to speedily conclude this investment. But above all, the chemistry between us has been fantastic and we share a common belief in the global abilities of Nimbus and that's where I believe 3i will add strategic value."

Growing the business
NCL is already putting 3i's funds to good use. US$9m has been earmarked for an investment in a sports channel and another US$9m has been put aside to build the movie and  distribution side of the business. Funds have also been invested in a library of content for the company's video on demand business.

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