Saregama’s strategic move into digital entertainment: What does the Pocket Aces acquisition mean for the music giant?

Saregama India is embarking on an exciting new phase of growth with its recent majority acquisition of Pocket Aces Pictures Private Limited, a rapidly expanding digital entertainment company. Pocket Aces boasts a substantial and direct connection with more than 95 million digitally savvy, younger consumers through platforms like Instagram and YouTube. In this transaction, Saregama is set to acquire 51.8% of Pocket Aces’ shares for approximately Rs 174 crore in an all-cash deal, with a predefined path to potentially secure an additional 41% stake within the next 15 months at agreed-upon valuation multiples.

This strategic move is a significant step towards Saregama’s overarching goal of establishing itself as a leader in the realm of New Music across various Indian languages. Pocket Aces, known for its youth-oriented digital content creation and publishing, possesses an impressive intellectual property portfolio comprising over 3000 content pieces spanning web series, sketches, music videos, and reels. These offerings are distributed across its various channels, including FilterCopy, Nutshell, and Gobble, with the company consistently delivering more than 30 new pieces of content daily.

Furthermore, Pocket Aces operates Clout, a talent management division that represents over 100 digital influencers, and Dice Media, a long-form content studio that has produced relatable, youth-centric web series available on prominent OTT platforms like Netflix, Hotstar, and Amazon.

The acquisition of Pocket Aces represents a significant expansion for Saregama, introducing a wealth of intellectual property assets and a substantial distribution network with over 95 million followers. Saregama intends to harness this network to enhance the visibility of its music library among the 18-35 demographic. Additionally, this strategic move is expected to foster synergies between the artist and influencer management divisions, as well as the long-format video production segments, of both companies.

Avarna Jain, Vice Chairperson of Saregama, said, “This acquisition signifies the confluence of tradition and innovation. While we have always been leaders in the realm of music and media, this partnership with Pocket Aces will add new dimensions to our business as we tap into the burgeoning young digital audiences.”

On Friday, Saregama India’s stock surged impressively, rising by over 6%t to reach an intraday high of Rs 393.35 per share on the BSE. The trading session also saw a substantial increase in trading volume, surpassing its average by a significant margin of 1.97 times. Notably, the stock has experienced robust buying interest, having generated remarkable multibagger returns exceeding 550% in just a span of three years.

Saregama owns the largest music archives in India, one of the biggest in the world. The ownership of nearly 50% of all the music ever recorded in India also makes Saregama the most authoritative repository of the country’s musical heritage.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to change. Please consult an expert before making related decisions.