Providence tunes into India TV shopping

When Star Group started looking for a buyer for its 50% interest in Star CJ Network India - a joint venture set up in 2009 with Korea-based CJ O Shopping - Providence was able to leverage this prior relationship. 

"They initially only wanted to work with a strategic investor but we had a controlling interest in German shopping channel HSE24 so in that sense we are a strategic," explains Bis Subramanian, a managing director with Providence. "They really needed someone who knew the space, so that made us the right partner and we entered into discussions."

The size of the transaction was not disclosed but it is said to be in excess of $50 million. Star and CJ are understood to have each committed $55 million to the business when it was first set up. Star will now make a full exit in order to focus on its sport and entertainment interests, while CJ will retain its interest.

Star CJ operates Star CJ Alive, a 24-hour shopping channel that reaches about 50 million homes and sells a 1,500-item range of electronics, kitchen ware, household appliances, jewelry and apparel. There is also an online retail platform, but the TV channel still accounts for the bulk of its sales, which amounted to around $101 million last year.

While Providence has previous experience in the TV shopping space, this is the first time it has entered the space in developing economy. Subramanian explains that TV shopping in India is still in its nascent stages compared to developed markets. Star CJ's sole competition is HomeShop18, which launched in 2008 and is backed by SAIF Partners and OCP Asia.

"In developed markets TV shopping came about after the organized retail market, so it was very much an ancillary shopping medium," says Subramanian. "In India, where organized retail is not yet developed, it has the potential to be a mainstream shopping medium."

This is particularly the case in lower-tier cities where consumers do not have access to shopping malls or big brand retailers. Star CJ has been looking to cater to these markets through alternative payment methods such as cash on delivery, demand draft and cast remittances - essential in a country with low credit card penetration.

But Subramanian believes they are just scratching the surface in terms of penetration. "In the future we will have more channels, either targeting different demographics or languages," he says. "Our first aim it to increase the number of homes reached and then we will look to integrate the platform with mobile devices.

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• Topics
• South Asia
• Media
• Consumer
• Buyouts
• Consumer
• Media
• Joint Venture
• Providence Equity Partners
• India