Intel Capital Invests In Hungama.com; $40 Million In 10 Companies

Intel Capital has announced a fresh investment round of $40 million (Rs 209.24 crore) in 10 different technology companies including the Indian company Hungama.com. The financial details of each individual investment were however, not disclosed.

Earlier, the global advertising major WPP Group had acquired a majority 51% stake in Hungama Digital Services Private Limited, through its wholly owned agency JWT Singapore in June 2012.

Hungama Investors: ICICI Ventures was a principal investor in Hungama in October 2000, but a Forbes India report suggests that ICICI Ventures pulled out funding from the company in October 2009. According the report, ICICI Ventures disbursed only 55% of its total funding before pulling the plug. It also adds that Rakesh Jhunjunwala invested Rs 2 crore in the company, through which the company bought back its stake from ICICI Ventures. Rakesh Jhunjunwala is now believed to be a key shareholder in Hungama and is currently on the company’s board, although an ET report suggested last year that he was planning to exit from his investments in Hungama Mobile.

According to a Rediff report, Anil Ambani-promoted Reliance Capital also held a minority stake in the company, back when it was called Virtual Marketing (India) Pvt Ltd. The company was later rebranded as Hungama Digital Media Entertainment Pvt Ltd, although it wasn’t clear if the company was just renamed or a new venture was formed.

Launched in 1999, Hungama Digital Media Entertainment, Hungama.com’s parent company, currently operates businesses in mobile, gaming, online music retail including Hungama.com, voice services and integrated media. The company claims to have a catalog of over 2.5 million content pieces across various genres and languages in the form of music tracks, movies, music videos and mobile content. This includes a movie catalog over 5,000 full length movies and television titles, acquired through content partnerships with movie studios like Yash Raj Films, T-Series, Reliance Home Video, Ananda Video, Ultra, Shemaroo, Krishna and Kavitalaya.

Hungama also claims to have registered 20 million users for its digital storefront, across various platforms like mobile, tablets, TVs and other connected devices. During the launch of its online movie service in the Middle East, the company had claimed that the service already has over 50,000 paid subscribers from India and hopes to have 10,000 subscribers from the Middle East in the first phase.

Other Investments: Besides Hungama, Intel Capital has also invested in:

– Content sharing platform Box (California, United States)
– Social radio platform Jelli (California, United States)
– Social game developer LIFO Interactive (Korea)
– Mobile proximity platform NeuAer (Los Angeles, United States)
– Mobile payment company PagPop (Brazil)
– Enterprise cloud services company Tier 3 (Washington, United States)
– TV-focused gaming service provider Transmension (China)
– Mobile ad network company UUCUN (China)
– Integrated circuit (IC) design house FocalTech (Taiwan)

Previous Intel Investments: In October 2011, Intel Capital had announced an investment round of $20 million in six Indian companies. Through this investment, it completed investments in Saankhya Labs, Testing Czars and FINO and signed new investment agreements with What’s On India, enStage, and DURON Energy. Similar to today’s investment, the exact financial terms of individual investments were not disclosed.

In May 2011, the investment venture had announced that it had invested $18 million in Indian companies, including investments in new companies PolicyBazaar and healthcare venture, SSARSC, in addition to follow-on investments in Yatra.com, mobile media company July Systems and enterprise application development company WSO2.

* Corrigendum: An earlier version of this post incorrectly mentioned Hungama Digital in the headline. Apologies for the error; the post has been updated.

2 Comments

Satish October 3, 2012

Few more insights:
1. ICICI Ventures stopped funding in Oct 2001 (immediately after 9/11). Team Hungama led by Neeraj Roy survived thru that and became monthly cash positive from March 2012.
2. Rakesh Jhunjhunwala bought ICICI venture's equity when Hungama bought T-series content license in 2005
3. At the same time, Amitabha Jhunjhunwala (Reliance Capital fame, cousin of RJ and personal friend of CEO) led company invested into hungama in 2005 to fund the T-series content costs. They took 26% equity of the company. This company was some shell company and with some obscure name. No one can directly prove it was AJ's company.
4. Later on in 2007 Hungama did some rights issue where all the existing share holders put additional money to continue funding escalating costs of content licensing.
5. In this rights issue, CEO renounced his rights in favor of other share holders (in a way he encashed ;)
6. Since 2006 there are several attempts to raise money beyond exisiting share holders but they were unsuccessful (either for valuation or vision or question being is there a team beyond the CEO).
7. Existing share holders extended lot of help to the company in terms of appointing external consultants to guide company for IPO etc or create SPV or shell companies so that new investment can be brought in for specific verticals.
8. This move paid off and finally we see two investments - one from Intel and second from JWT.
9. Question is how,where and why the external investments - seems like JWT was a desperate move as it was a loss making proposition for the company. Expensive talent and not able to scale the revenue. Intel is a smart move as it helped some heavyweight investors to exit. But unanswered questions are how the exits have happened and who owns the companies like Hungama Digital Services? What is the relationship between the newly formed companies and old company?

VAS Guy October 8, 2012

Hungama Digital was winning some of the biggest digital advertising accounts in the last 3-4 years, and is in the top 3 digital agencies in the country... hardly a loss making dept. Also- wondering which heavy weight investor has exited?? care to elaborate??

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