After a failed bid to build an exposure in the Indian media sector (read: Ushodaya Enterprises which owns Eenadu group in Andhra Pradesh) three years ago, private equity giant Blackstone has struck a new deal. It will invest Rs 225 crore (~$50 million) in Jagran Media Network Pvt Ltd to pick up an undisclosed stake, which will, in turn, hold majority share of Jagran Prakashan Ltd
This comes within a month of UK-based media house Independent News & Media selling 7.5% or over half of its remaining holding in Jagran for Rs 255 crore to a bunch of domestic and foreign funds.
As of December 31, promoters Gupta family owned 55.33% stake in the company all through individual shareholding. In the latest announcement, the individual shareholding will be transferred to a holding company Jagran Media Network Pvt Ltd in which Blackstone will pick an undisclosed stake.
Jagran has a market cap of Rs 3,528 crore (as of April 6) which gives the promoters stake a valuation of Rs 1,952 crore. Assuming all of the individual shareholding gets transferred to the holding company and at yesterday’s valuation, Blackstone could have picked somewhere close to 11.5%. However if the holding company gets to own around 51% (with the rest remaining in the hands of some promoter individuals) then Blackstone could be picking 12.5%.
Talking about the deal with Blackstone, Mahendra Mohan Gupta, Chairman and Managing Director of JPL, said: “Our endeavour shall be to make the best use of their expertise and relationships in driving our top-most agenda of organic as well as inorganic growth and making all the stake holders happier.”
Akhil Gupta, Chairman and Managing Director of Blackstone Advisors India Pvt Ltd, said: “Print media in Indian languages is poised to experience significant growth in the coming years, driven by increasing personal consumption levels in the Tier II/III cities as well as rural India. Our experience in the media sector in India and globally will enable us to be value-added partners to management and strengthen the company’s leadership position.”
Jagran scrip shot up 8.5% in early morning trade today and is currently trading at Rs 120.55, up 2.7%. Jagran operates through its flagship Hindi newspaper brand, Dainik Jagran, a widely read newspaper in the world with a readership of 54.6 million.
It also publishes 12 editions of I-Next, a bilingual compact newspaper and 23 editions of City Plus, a weekly English tabloid. The company also has an outdoor advertising arm, Jagran Engage, below-the-line solutions arm Jagran Solutions, mobile value added services, forayed into internet with Yahoo India, with Jagran.com being the largest portal across all Indian languages.
The holding company Jagran Media Network Pvt Ltd will file for necessary approvals for the investment with the Foreign Investment Promotion Board (FIPB) on Wednesday. The FIPB nod will be closely watched as it proved to be the stumbling block last time Blackstone looked to pick a stake in Eenadu.
At that time Blackstone had proposed to invest $275 million in the Hyderabad-based media house Ushodaya Enterprises which operates Eenadu Group. The deal had got mired in a political battle between the promoters of Ushodaya and other politically connected competitors in the state which delayed the clearance from FIPB. Finally, Blackstone had pulled out of the deal.