Mumbail: Newspaper publisher Punjab Kesari Group is planning to raise up to Rs 150 crore from a private equity (PE) firm to help it enter new markets.
The firm will issue fresh equity for stake dilution, according to Amit Chopra, director of Punjab Kesari. The firm will not offload more than 10% stake to the firm from which it raises the money.
“The funds raised will help us strengthen our position in existing markets,” said Chopra. “Our intent is also to roll out editions in markets such as Uttar Pradesh, Rajasthan and Delhi.”
New Delhi-based Coralbay Advisors Pvt. Ltd is working with Punjab Kesari on its fund-raising and expansion plans.
“They are a perfect candidate in our view for expansion, possibly in combination with PE or strategic partnerships,” said Amit Gupta, senior partner, Coralbay Advisors.
The group’s Hindi newspaper Punjab Kesari has a presence in Punjab, Haryana, Jammu and Kashmir, Himachal Pradesh and Chandigarh. It has a daily circulation of 1.1 million, Chopra said, and posted a turnover of over Rs 350 crore in the year ended 31 March. The firm is seeking a valuation of Rs 1,200-Rs 1,500 crore, according to Chopra.
The Punjab Kesari Group was established in 1948 with Hind Samachar in Urdu language. It publishes Punjab Kesari in Hindi and Jagbani in Punjabi as well.
Nearly six months ago, the firm had borrowed about Rs 40-50 crore for expansion. The money was used to buy equipment and upgrade facilities, Chopra said.
Regional publications have been generating strategic and strong PE funding interest. Regional newspapers have shown growth, unlike national papers that have seen a decline, said Vikas Aggarwal, assistant vice-president at Mumbai-based investment bank Singhi Advisors Pvt. Ltd. Singhi was adviser to Mid-Day Multimedia Ltd when its print business was acquired by Jagran Prakashan Ltd in a cashless transaction.
“The long-term plan for regional players is to become a national player or be part of a national brand,” Aggarwal said. “Exits in such firms will largely be through strategic alliances.”
In India, the newspaper industry is estimated to be worth Rs 19,700 crore while the magazine industry is estimated to be Rs 13,000 crore, according to a report released last month by industry lobby Federation of Indian Chambers of Commerce and Industry (Ficci) and consultancy KPMG.
Hindi continues to be the key language market, with five out of top 10 dailies being published in that language.
Hindi and other regional languages have a combined readership of almost eight times that of English newspapers. These two segments contribute approximately 60% to the industry’s revenue and cater to 89% of the readership. Together, they are expected to grow at a compounded annual growth rate (CAGR) of 10.9% over the period 2011-16, outpacing the English language market’s growth of 6.3%, according to the report.
Although English newspapers have a significant share of advertising, there is growing awareness about the potential of non-metro cities and the regional language papers that cater to those areas. The realization took hold during the global downturn, when business outside the big Indian cities flourished on the back of domestic demand.
Overall, the print industry is expected to grow 9% year-on-year, said Jehil Thakkar, partner and head of media and entertainment sector at KPMG in India.
“Newspapers grow slowly, but once established, they are cash engines,” he said, adding that stable businesses that have been around for years are nothing short of being household brands. Revenue enhancement through offering of new products is possible, he added.
“Media spending will go where reader base is,” Thakkar said “Investors will go where businesses are.”
There are more than 82,000 registered newspapers in India as on March 2011, the Ficci-KPMG report said. Each state has two-three large brands and dozens of smaller ones.
Overseas investors are allowed to own up to 26% in newspaper firms or news broadcasters.
Punjab Kesari competes in some markets with Hindustan, published by Hindustan Media Ventures Ltd, a subsidiary of HT Media Ltd, the publisher of Mint.