MUMBAI: Reliance ADAG has substantially raised its stake in Saregama India Ltd to 12.47 per cent, the largest it has ever held in the Kolkata-based entertainment company.

This is closer to trigerring the takeover code and if Reliance ups its stake to 15 per cent it will have to come out with an open offer to buy a further 20 per cent in Saregama.

Reliance Capital`s subsidiary Sonata Investments has picked up 1063299 shares, or 7.24 per cent, of Saregama in an open market transaction at Rs 250 per share. Sonata already holds 5.23 per cent stake in Saregama.

The market is speculating whether Reliance is seriously looking at Saregama as a takeover opportunity. But the promoters of Saregama are adequately protected with an ownership of 50.77 per cent in the company.

"If we look at it historically, Reliance has bought and sold Saregama shares in the market. It looks more like a portfolio investment than an attempt as a business opportunity. The promoters of Saregama are bullish about the company`s growth and will not dilute their equity control," says a senior company executive.

Early this year Reliance made an offer to buy 20 per cent in TV Today. This is the only occasion where Reliance has come out with an open offer in the media space, but the pricing was not aggressive and did not find any takers.

Saregama will be a perfect strategic fit for Reliance`s rapidly expanding entertainment interests, analysts say. It has a huge music library which can provide exclusive content to Reliance`s FM radio and telecom businesses. Besides, Saregama has exclusive partnership with some major Hollywood studios like Paramount, Warner Bros, Universal and Dreamworks for distribution of their home videos in India.

"Saregama has turned around and the promoters are keen to invest rather than part with their equity. The movie plans are in place and digitalisation is in full pace," a company executive says.

In a parallel development, TRowe Price International has sold 1057570 shares, or 7.21 per cent, of Saregama in the open market at Rs 260.

Saregama shares surged 10 per cent at the BSE on Wednesday, closing at Rs 275.10.