Bennett Coleman & Company Ltd (BCCL), the publishers of the Times of India and the Economic Times dailies that strikes ad-for-equity deals, is picking an estimated 2.2% stake in neighbourhood retail chain operator REI Six Ten Retail Limited. Brand Equity Treaties Ltd, an arm of BCCL, is picking shares through a preferential allotment worth Rs 20 crore which at current market price translates into deal for 2.2% stake.
Originally a retail arm of rice company REI Agro, REI Six Ten was created through a demerger from the parent around two years ago. The company that operates through 6Ten chain of stores sells groceries, FMCG, fruit & vegetables. Although it has presence in Mumbai, Kolkata, Ahmedabad, Nagpur and Baroda, it is primarily a northern Indian retail player.
The firm has an asset light strategy that has allowed it to expand swiftly and as of March 2010 it had 310 stores all run through franchisees. For the year ended March’10, the company had revenues of Rs 690 crore with net profit of Rs 26 crore.
The deal would add to BCCL’s exposure in the retail sector, one of its prime picks as it fits in closest with the company’s investment strategy that revolves around selling ad space in its media vehicles through such minority stake purchases. Although it has been slowly distancing itself from its original ‘almost’ barter transactions to part barter deals, it remains an ad-for-equity investor.
BCCL already has stakes in over dozen firms including Archies, Future Ventures, Hakoba Lifestyle, Neo Retail, Pantaloon Retail (India), Priknit Retail and Vishal Retail.
In terms of number of portfolio companies, retail stands only next to IT & ITES in terms of volume of investments till date. Other sectors where BCCL has picked stake in over half a dozen firms include real estate, media & entertainment, healthcare & wellness, infrastructure, FMCG, BFSI and education.