Saregama, a music label company, plans to pay Rs 174 crore ($20 million) to acquire a 51.82% stake in the digital entertainment start-up Pocket Aces.
According to a regulatory filing obtained from the National Stock Exchange, the board of Saregama has decided to buy 6,60,650 shares of Pocket Aces in two installments. A secondary route will be used to purchase these shares.
Additionally, Saregama is investing in primary shares worth Rs 15 crore.
With regard to the two tranches and the initial issuance of shares, the company intends to acquire a 92.61% stake from Pocket Aces. In accordance with the filing, 52% of the shares will be acquired in two months, and the remaining ownership will be acquired in eighteen months.
Peak XV has a 26.2% stake in the company, according to data intelligence platform TheKredible, while the three co-founders, Anirudh Pandita, Ashwin Suresh, and Aditi Shrivastava, collectively own 34.21%.
Through its three primary content channels—Dice Media (premium long-form web series), Filter Copy (short-form content), and Gobble (short-form food videos), 10-year-old Pocket Aces produces and distributes interesting original content for millennial audiences.
According to the company’s filings, the acquisition will give Saregama access to a sizable body of intellectual property and a distribution network with more than 95 million subscribers. According to Saregama, the two businesses will benefit from synergies in artist and influencer management as well as long-format video production as a result of the acquisition.
According to filings, operating revenue for Pocket Aces in FY23 was Rs. 104.39 crore. This represents a modest increase from FY22’s revenue of Rs 97.34 crore and losses of Rs 5.98 crore. Additional information about FY23 was not provided by the company.
To date, Peak XV Partners (formerly Sequoia), 3one Capital, DSP Mutual Fund, and other investors have contributed over $20 million to Pocket Aces.
In February of this year, Pocket Aces fired 50 employees, or one-fourth of its workforce, in a process similar to that of many growth and late-stage companies.
