Warburg Pincus (through investment arm Cliffrose) is picking 3.2% stake in Synergy Media Entertainment, the radio broadcasting arm of media group Dainik Bhaskar for Rs 1.52 crore. The private equity major has received approval from the Foreign Investment Promotion Board (FIPB), the nodal body for clearing foreign investment into India, for the deal. This deal values the radio broadcaster at Rs 47.5 crore, marginally short of $10 million.
Synergy Media operates under the brand My FM. It started radio broadcast in Jaipur in May 2006 and has now expanded presence to 17 stations including Ahmedabad, Ajmer, Amritsar, Bilaspur, Bhopal, Chandigarh, Gwalior, Indore, Jabalpur, Jaipur, Jalandhar, Jodhpur, Kota, Nagpur, Raipur, Surat and Udaipur.
Apparently the deal agreement is almost two years old. DB Corp, the holding company of the media group which was in the process of floating a public issue in 2008 had disclosed in its red herring prospectus filed with market regulator Sebi that the promoters have entered into a agreement in December’07 with Warburg for this transaction.
The transaction value has not changed since then and reflects the status quo on valuation in the sector. In some other sections of the media industry current valuations are much lower compared to that last seen at the peak of the bull market which ended in January’08.
Warburg Pincus already holds 7.14% stake in DB Corp which was acquired for around Rs 150 crore in 2006, valuing the firm at Rs 2,143 crore at that time. DB Corp had disclosed that Warburg was looking to exit its investments in the media group by selling out to a third party investor. But the private equity firm is yet to sell the stake.
With the new transaction with Warburg Pincus, Dainik Bhaskar's holding will come down from 56.82% in Synergy to 55% post the transaction. Another deal in the space is India Value Fund's investment in Music Broadcast Pvt. Ltd (Radio City FM), in which the PE firm holds a majority stake.