India Value Fund, Star sell Radio City to Jagran Prakashan

Blackstone-backed media giant Jagran Prakashan has forayed into the radio segment with the acquisition of Music Broadcast Private Limited (MBPL), which runs an FM radio channel Radio City, according to a stock market disclosure.

The financial terms of the deal are not disclosed. However, sources close to the development told VCCircle that the deal could be worth Rs 475-500 crore.

Mid-market buyout fund India Value Fund Advisors Ltd had acquired majority stake (55 per cent) in MBPL in 2005. In 2007, Star Group had also acquired a 20 per cent stake in the radio operator. The PE firm was looking to dilute its stake since a long time and was also reportedly in talks with Reliance Broadcast Network Ltd, which operates the radio station BIG 92.7 FM.

After IVFA's investment almost a decade ago, the company had acquired additional 16 licences. Radio City is now one of the largest radio channels in the country and has presence in top 14 of top 16 advertising revenue generating markets.

In the all cash transaction, Jagran is acquiring MBPL’s holding firm and a subsidiary that provides activations, Jagran Prakashan said in the statement.

“Acquisition of Radio City consolidates our position as India's leading media and communication group. The radio business will complement our print outdoor, activation and digital business and enable deeper inroads with advertisers both at national and local level,” said Mahendra Mohan Gupta, CMD, Jagran Prakashan.

In fiscal 2013-14, MBPL posted revenues of Rs 161.8 crore, and for the first half of 2014-15, the company reported a 28 per cent growth in advertising revenues.

“The radio business has witnessed significant growth in recent past and is expected to grow at more than 18 per cent CAGR in the recent years. The deal will catapult JPL into a leadership position in the radio industry and enable it to benefit from the rapid growth in radio advertising,” Gupta added.

The company will fund the acquisition primarily from internal accruals and investments. This acquisition will not impair its ability to distribute dividends, the statement said.

The acquisition is subject to regulatory approvals, including those from the Ministry of Information and Broadcasting, and execution of binding agreements.

Jagran Prakashan had received an investment of Rs 225 crore from the private equity major Blackstone Group in 2011.

It is engaged in printing and publication of newspapers and magazines in India. The media company primarily offers Dainik Jagran, a daily newspaper. Besides, it publishes i-next, a bilingual daily; City Plus, a

weekly English tabloid; MiD-DAY, an afternoon newspaper; MiD-DAY Gujarati, a Gujarati tabloid; Inquilab, an Urdu newspaper; Naidunia, a Hindi daily newspaper; Sakhi, a women’s magazine; and Punjabi Jagran, a Punjabi language daily newspaper.

(Edited by Joby Puthuparampil Johnson)

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