BackBCCL buys 49% stake in Daiki Brands through ‘private treaty’
Such deals involve BCCL picking up equity stakes in firms in return for promoting them through long-term advertising deals
Premium(Priyanka Parashar/Mint)
Mumbai:Bennett, Coleman & Co. Ltd (BCCL), the publisher of The Times of India and The Economic Times, has bought a 49% stake in Mumbai-based underwear maker Daiki Brands Pvt. Ltd through a so-called private treaty.
Rajesh Sharma, national head, market development and brand capital, BCCL, confirmed the deal over the phone on Monday but declined to provide details.
Two other persons with direct knowledge of the matter confirmed that a deal had been completed. Neither wished to be identified
Akshay Mahendran, managing director of Daiki, said in an email response that he would not “comment on market speculation".
Akshay is the son of A. Mahendran, chairman of Daiki Brands. The senior Mahendran, known for making the mosquito repellent Good Knight a household name, is also the managing director of Godrej Consumer Products Ltd.
BCCL is a competitor of HT Media Ltd, the publisher of Hindustan Times and Mint.
According to one of the two persons, the BCCL investment is in the form of “advertisement capital".
BCCL is known for its ad-for-equity deals, or private treaties, with companies. Launched in 2004, these treaties translate into BCCL picking up equity stakes in companies in return for promoting those “partners" through long-term advertising and promotion deals.
Other media companies, including HT Media, followed suit. (Editor’s note: HT Media’s private treaty clients are not guaranteed favourable coverage.)
The deals became controversial after it emerged that, in at least some instances, they included positive coverage. Market regulator Securities and Exchange Board of India asked media companies to provide better disclosure of such deals. In response, BCCL created a separate website for its private treaties business, which was renamed Brand Capital.
The Daiki deal is different because BCCL usually picks up minority stakes between 2% and 10%.
Founded in late 2009, Daiki Brands has three brands—Peri Peri, Biara and Daiki—for both men and women.
According to audit and consulting firm Ernst and Young (E&Y), the Indian underwear and nightwear market was valued at about $2 billion in 2011 and is expected to grow at a compounded annual growth rate or CAGR of about 15% till 2015.
Daiki also sells the Peri Peri brand online and has similar plans for its other brands as well.
Monika Anand, chief executive officer and founder of Under Cover Lingerie, an e-store, said the online sale of lingerie is gaining ground.
“Certain ventures, while being a lucrative business proposition, require disproportionate investment towards building an aspirational brand, thereby driving enterprise value. Given the advertising dependent nature (60-70% of overall investment in the business set-up) of such ventures, the need to build a brand to reckon with is critical to make the venture thrive. Brand Capital Springboard is visualized as an opportunity to fund the entrepreneurs’ brand creation needs through significant equity participation by the Times Group (BCCL) concept dotted line... The ownership of the brand / IPR will reside with the entity in which The Times Group (BCCL) would take a stake..." says the company on its website, www.privatetreaties.com.
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