Successful IBN deal raises funding hopes for Network18 Group

Successful IBN deal raises funding hopes for Network18 Group

Mumbai: In a sign that there is still an appetite for certain kind of media investments in India, five fund houses earlier this week invested Rs114 crore in IBN18 Broadcast Ltd, part of media conglomerate Network18 Group.

The deal, made through a qualified institutional placement (QIP) at a small premium on the base price, which is arrived at using QIP pricing formula set by markets regulator Securities and Exchange Board of India, was the first of its kind in the Indian equity capital market in almost six months.

The fund houses were Anil Ambani-controlled Reliance Capital Ltd and funds managed by asset management companies of T. Rowe Price, Franklin Templeton Investments, JM Financial Ltd and Hong Kong and Shanghai Banking Corp. Ltd (HSBC). The five investors collectively bought a 7.5% stake through fresh equity shares at Rs102 per share.

IBN18’s shares closed at Rs101.90 on Wednesday, with a market cap of Rs1,417 crore. It hit a high of Rs256 earlier this year and a low of Rs57 last month.

The successful completion of the deal, raised to repay a loan taken by Network18 Group to raise its stake in Colors—a joint venture entertainment channel with Viacom Inc.—to 50%, has left bankers hopeful about more of the same. “It indicates that there is going to be reasonable appetite for quality," said the head of ECM (equity capital markets) advisory at a large foreign bank, who didn’t want to be identified.

There has been virtually no equity-linked fund raising from Indian companies in recent months as the bellwether Bombay Stock Exchange index, the Sensex, has slumped 56% in 2008, amid a worldwide slump.

“Top investors are willing to bet if the company has strong execution capabilities," said Anish Jhaveri, head of equities at Antique Stock Broking Ltd. “News channels are making losses but investors are looking beyond the near future."

The deal was advised by Mumbai-based Antique Stock Broking, Nimesh Kampani’s JM Financial and HSBC’s advisory team. Antique alone raised Rs110 crore of the total.