Saregama India has entered into a structured, long-term investment agreement with Bhansali Productions that gives it the option to take majority control of Sanjay Leela Bhansali’s film studio by 2030, while immediately securing rights of all future music created by the banner.

Under the deal, the Kolkata-headquartered music record label and content company will invest Rs. 325 crore in Bhansali Productions through compulsory convertible preference shares (CCPS), the companies said. It will subscribe to 9,960 CCPS of face value Rs. 10 each on or before February 14, 2026.

These preference shares will convert into equity in 2028, at which point Saregama’s stake will be between 28% and 49.9% of Bhansali Productions, depending on the conversion formula.

Following the conversion, Saregama will have the option, but not the obligation, to acquire additional shares to take its holding to 51% by 2030, giving it majority control of the studio.

Pricing for the additional shares will be determined through pre-agreed mechanisms linked to Bhansali Productions’ audited financials.

Alongside the equity investment, Saregama has entered into a music rights agreement under which it will acquire the rights to all future music created and produced by Bhansali Productions.

This provides immediate strategic value to Saregama, regardless of whether it ultimately exercises the option to become a majority owner, amid the ongoing chase for intellectual property in the entertainment industry.

The investment is expected to be earnings-per-share accretive for Saregama by FY27 and to improve margins across both its music and video segments.

“Bhansali Productions’ excellence in storytelling and content creation perfectly complements our leadership in music and entertainment,” said Avarna Jain, vice chairperson of Saregama India.

She said the partnership reflects the company’s strategy of aligning with leading creative talent while delivering long-term shareholder value.

For Saregama, the partnership strengthens two priority areas. It bolsters the video segment of its business and further consolidates its leadership in music licensing, with Bhansali Productions providing access to a steady pipeline of premium original music.

Under the partnership framework, Bhansali Productions will retain complete creative control, while Saregama will provide governance oversight and financial discipline. Bhansali Productions will also retain ownership of the intellectual property of all its films going forward.

Sanjay Leela Bhansali, founder of Bhansali Productions, said meaningful cinema requires time, trust and respect for the creative process. “In Saregama, we have found a partner that understands this philosophy. We share a deep respect for art, music and storytelling that is grounded in tradition and resonates across generations,” he said.

Aligned with its evolving content strategy, Saregama will gradually streamline its in-house film production activities over the next one to two years, focusing on strategic partnerships with marquee creators.

The company currently produces films through its in-house arm, Yoodlee Films.

In FY25, 16% of Saregama’s revenue came from video content, spanning films, digital and short-format programming. Its total revenue for the year stood at Rs. 1,171 crore.

For Bhansali Productions, the capital infusion will support a significant expansion of its content slate across formats, while allowing the studio to retain ownership of its film intellectual property.

The company has a pipeline of more than 10 feature films planned over the next three years. Upcoming projects include Love & War, directed by Sanjay Leela Bhansali and starring Ranbir Kapoor, Alia Bhatt and Vicky Kaushal, and Do Deewane Shehar Mein, a romantic drama directed by Ravi Udyawar and featuring Siddhant Chaturvedi and Mrunal Thakur.

“This is a landmark transaction, coming close on the heels of the Adar Poonawalla–Dharma Productions deal,” said Nitin Menon, managing partner at NV Capital, an investment firm focused on the media and entertainment industry. “Legacy creative brands like Bhansali Productions have strong recall value, and this reinforces the belief that high-quality IP continues to attract long-term capital.”

Over the years, associations have developed between leading film production houses and music labels. Recently, Universal Music partnered with Maddock Films to start a new music label, Mad4Music.

“Strategically, this acquisition makes sense. From the perspective of the industry, consolidation is not necessarily unhealthy,” said Tanuj Garg, partner at film production company Ellipsis Entertainment. “The deal, however, could result in increased concentration of capital among a few players,” he added.

“There is a need for more democratic models for mid-sized and independent producers who churn out equally, if not more, compelling content. This is becoming even more important,” Garg said.

ET had reported on December 2 that several Bollywood studios, including Bhansali Productions, were exploring fundraising amid market volatility driven by changing consumer behaviour, rapid OTT adoption and flat theatrical footfalls.

Despite this, M&A activity in the sector has been limited, making this only the third major Bollywood deal in the past five years.

Founded in 2003, Bhansali Productions has produced some of Indian cinema’s most successful films, including Devdas, Bajirao Mastani, Padmaavat and Gangubai Kathiawadi, as well as the Netflix series Heeramandi.

For FY25, the company reported revenue of ₹304 crore, Ebitda of Rs. 60 crore and profit after tax of Rs. 45 crore.

Kotak Investment Banking acted as the exclusive financial advisor to Bhansali Productions on the transaction.