Mumbai : India Value Fund Advisors, India’s biggest homegrown private equity fund, has sold its entire stake in the company that owns FM radio channel Radio City to the Jagran Prakashan Group for Rs 350-400 crore.
The fund that bought Music Broadcast Pvt Ltd in 2007 from Star Group has made at least four times returns on investments by selling it to one of the largest media houses in India, people familiar with the matter said.
Shailendra Gupta, owner of the Dainik Jagran Group, confirmed the deal. “Yes we have bought out Music Broadcast (owners of Radio City) and the final structure of the deal is yet to be finalised,” he said. An India Value Fund spokesperson and Apurva Purohit, chief executive of Radio City, didn’t respond to emails.
Radio City, one of the leading FM players in India, operates in 20 cities including major metros such as Mumbai, Bengaluru, Chennai and Delhi. Apart from being a a profitable business, the company is also debt free. Ambit Corporate Finance was the exclusive adviser to India Value Fund.
The fund, which manages more than $1 billion of assets, has been buying controlling stakes in unlisted companies. In 2007, it bought Music Broadcast for Rs 75-80 crore from Star Group. It later pumped in more money to grow the business. “The fund is expected to make around three time return on its (total) investments with this exit,” a person involved in the deal said.
Jagran Prakashan, publisher of Hindi daily Dainik Jagran, is one of the largest regional media houses in India. It has been growing through acquisitions in the recent past. In 2009, it bought out the print media business of listed Mid-Day Multimedia for Rs 200 crore in a stock deal.
“For a print business, there are a lot of synergies with the radio medium where both being local mediums can complement each other for advertisers. Radio coupled with print offers a powerful package to the advertisers where one can reach out to a larger audience base,” said Ashish Pherwani, partner, media and entertainment, at EY India.
The Times Group that publishes The Economic Times competes with Dainik Jagran Group and Music Broadcast in some markets. With increasing smartphone consumption and media spread, more people are listening to FM radio.
With the Information & Broadcasting Ministry plan of auctioning the license for Phase III expansion of the FM Radios in the near future. The FM Radio business is having immense scope of growth and expansion opportunity and Jagran group being a player in Hindi belt can think of their expansion all over India with their tentacles spread all over India with this acquisition.