Even as Tribune Co, the publishers of Los Angeles Times and Chicago Tribune, has filed for bankruptcy (see report here), the Indian media industry is considered a growth industry. Temasek and India Equity Partners (IEP) will jointly invest Rs 163 crore ($32 million) in regional media house Lokmat Group, VCCircle has learnt. Temasek will pick up 15% stake in Lokmat Newspapers Pvt Ltd (LNPL) for Rs 128 crore and IEP will hold 4.5% of LNPL for Rs 34.8 crore. The transaction is two-tiered which involves issue of fresh shares and partial selloff by the promoters, Darda family. The deal will value LNPL at Rs 853 crore ($170 million).
VCCircle sources say Temasek, one of the two sovereign wealth funds of Singapore government, will initially pick up 11.5% stake in LNPL for Rs 64 crore ($13 million) and 9.64% in Prithvi Prakashan Pvt Ltd (PPPL), another group company for an additional Rs 64 crore. Similarly, IEP will buy 3.5% of LNPL for Rs 17.4 crore and 2.63% of PPPL for Rs 17.4 crore.
As of now LNPL is the flagship company of the Lokmat Group which publishes newspapers in three languages-- Lokmat (Marathi), Lokmat Samachar (Hindi) and Lokmat (English). PPPL is engaged in printing and publishing of newspapers, magazines, journals, etc and has also applied for a radio broadcast license.Both the firms are part of the Maharashtra based Lokmat Group.
LNPL currently owns 51% in PPPL through a subsidiary Airwaves Entertainment. The remaining 49% in PPPL is held by the promoters.
The group is in the process of restructuring operations wherein the publication business of PPPL will be demerged into LNPL. As a result the private equity investors will get additional shares of LNPL in place of their holding in PPPL.
The transaction involves Temasek and IEP picking equity through issue of fresh shares worth Rs 150 crore and acquisition of shares worth Rs 13 crore from the promoters. The deal is facing some roadblocks with a section of Finance Ministry terming the transaction as a case of round tripping. The proposal is expected to be considered by FIPB, the government authority which clears foreign investment into India.
For Temasek, this would be yet another investment in Indian media sector. It already has investments in electronic media group INX which operates two general entertainment channels besides an English news channel.
IEP is a $350 million India focused, growth-oriented private equity fund. Its investments include Amtek India, Bharti Infratel, Mannapuram Group of companies, Ocean Sparkle and Ikya.