Shares of Prime Focus Ltd slumped more than 6% on September 23 after the company announced a major fundraising by its AI-focused arm, Brahma AI. 

Brahma AI Holdings and Brahma AI Services India are set to raise up to $150 million, led by private equity firm Multiples, which has committed $100 million to the round. 

Brahma AI has raised the funds through the issue of compulsorily convertible preference shares. Multiples Private Equity Gift Fund IV will invest around $54.36 million in Brahma AI Holdings, while Multiples Private Equity Fund IV will invest about $45.64 million in Brahma AI Services India. The broader fundraising values Brahma AI at around $2 billion.

The company has also received additional investor interest of around $100 million. Brahma AI will evaluate whether to increase the size of the funding round to accommodate some or all of this demand, subject to the required approvals and transaction conditions.

The transaction will also change Prime Focus’ voting control over Brahma AI. Existing Class A shares held through DNEG Holdings will be converted into Class C shares, reducing Prime Focus’ indirect voting rights in Brahma Holdings from 89.27% to a maximum of 24.99% on a fully diluted basis.

However, Prime Focus will continue to hold around 65.67% economic ownership in Brahma Holdings and Brahma India on a fully diluted basis. Following the transaction, the two entities will move from subsidiaries to associate companies because Prime Focus will no longer exercise control over them.

Brahma AI focuses on enterprise audiovisual content, combining content management with visual AI, digital humans, voice and multilingual technologies. Its customers include Warner Bros, the NBA and Mayo Clinic, while Google, Hakuhodo and DNEG are among its strategic relationships.

The company plans to use the new capital to expand research and development, strengthen its presence in the San Francisco Bay Area and build a larger global sales operation. 

For Prime Focus, the transaction marks a shift in governance while allowing it to retain a majority economic interest in the AI business.

At 12:41 pm, the shares of Prime Focus were trading 3.05% lower at Rs 346.55 on NSE.

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