Adithya Vikram
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Reliance Broadcast Network Ltd (RBNL), an arm of billionaire Anil Ambani’s Reliance Group, is in talks with private equity (PE) firms to sell a stake in its 92.7 Big FM radio network —part of a broader effort by the group to reduce debt on its books.
Negotiations are underway with the local units of Providence Equity Partners Llc and T.A. Associates Management Lp, both based in the US, and Samara Capital and IDFC Alternatives Ltd, the PE arm of infrastructure financier IDFC Ltd, a top RBNL executive said.
EY, the consulting firm formerly known as Ernst & Young, has estimated the valuation of 92.7 Big FM at Rs.2,500 crore, the executive said on condition of anonymity.
“The company has been looking to monetize its investments in the media sector. We plan to close the deal within this quarter,” he said.
An email sent to the Reliance Group late on Wednesday evening remained unanswered, as of press time.
TA Associates declined to comment for this story.
Phone calls and text messages to Sumeet Narang and Gautam Gode, the co-founders of Samara Capital, went unanswered.
Bis Subramanian, managing director, Providence Equity Partners, also didn’t respond to calls and messages.
IDFC and EY declined to comment.
The Reliance Group is divesting assets to raise money to repay debt estimated by Capitaline at Rs.1.21 trillion as of 30 September 2015.
Stake sales in its financial services businesses, along with the plans to sell telecom towers, optical fibre, cement and road assets could net the group over Rs.50,000 crore, Mint reported on 14 December.
A second person close to the development said the stake sale in Big FM will take place at an enterprise value in excess of Rs.2,000 crore.
“The deal size is likely to be about $100 million (about Rs.680 crore),” this person said, also on condition of anonymity.
This implies that the company is likely to sell a roughly 34% stake in the radio business.
In November, the National Democratic Alliance (NDA) government increased the foreign direct investment limit in radio channels to 49% from 26%.
Radio broadcasters had welcomed the move, given the fact that the industry had spent Rs.3,000 crore on renewal of licences and Phase III FM radio auctions. The results of the electronic auctions of the first batch of Phase III of FM radio were declared on 2 December. The auctions, which ran 125 rounds and lasted 32 days, had on offer 135 channels in 69 cities. The total value of sold channels was Rs.1,187 crore.
After the e-auctions, Big FM added 14 new stations to its existing 45.
“Reliance (Group)’s entertainment business has been on the block for a long time. Since a strategic investor cannot come in because of regulations in the radio sector, a financial investor will bring the financial capital for growth and expansion,” said a media analyst on condition of anonymity.
According to a January report by GroupM, the media agency of global advertising group WPP Inc., advertising in the radio sector is estimated to grow 9.9% to reach Rs.2,195 crore in 2016.
The GroupM report suggested higher radio advertising growth towards the end of 2016. “There is scope for the medium to pick up towards end 2016 when most of the new stations (set up after Phase III licenses, round 1 were issued) are fully operational,” the report said.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay High court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.
source:-
Reliance Broadcast in talks to sell Big FM stake - Livemint
Negotiations are underway with the local units of Providence Equity Partners Llc and T.A. Associates Management Lp, both based in the US, and Samara Capital and IDFC Alternatives Ltd, the PE arm of infrastructure financier IDFC Ltd, a top RBNL executive said.
EY, the consulting firm formerly known as Ernst & Young, has estimated the valuation of 92.7 Big FM at Rs.2,500 crore, the executive said on condition of anonymity.
“The company has been looking to monetize its investments in the media sector. We plan to close the deal within this quarter,” he said.
An email sent to the Reliance Group late on Wednesday evening remained unanswered, as of press time.
TA Associates declined to comment for this story.
Phone calls and text messages to Sumeet Narang and Gautam Gode, the co-founders of Samara Capital, went unanswered.
Bis Subramanian, managing director, Providence Equity Partners, also didn’t respond to calls and messages.
IDFC and EY declined to comment.
The Reliance Group is divesting assets to raise money to repay debt estimated by Capitaline at Rs.1.21 trillion as of 30 September 2015.
Stake sales in its financial services businesses, along with the plans to sell telecom towers, optical fibre, cement and road assets could net the group over Rs.50,000 crore, Mint reported on 14 December.
A second person close to the development said the stake sale in Big FM will take place at an enterprise value in excess of Rs.2,000 crore.
“The deal size is likely to be about $100 million (about Rs.680 crore),” this person said, also on condition of anonymity.
This implies that the company is likely to sell a roughly 34% stake in the radio business.
In November, the National Democratic Alliance (NDA) government increased the foreign direct investment limit in radio channels to 49% from 26%.
Radio broadcasters had welcomed the move, given the fact that the industry had spent Rs.3,000 crore on renewal of licences and Phase III FM radio auctions. The results of the electronic auctions of the first batch of Phase III of FM radio were declared on 2 December. The auctions, which ran 125 rounds and lasted 32 days, had on offer 135 channels in 69 cities. The total value of sold channels was Rs.1,187 crore.
After the e-auctions, Big FM added 14 new stations to its existing 45.
“Reliance (Group)’s entertainment business has been on the block for a long time. Since a strategic investor cannot come in because of regulations in the radio sector, a financial investor will bring the financial capital for growth and expansion,” said a media analyst on condition of anonymity.
According to a January report by GroupM, the media agency of global advertising group WPP Inc., advertising in the radio sector is estimated to grow 9.9% to reach Rs.2,195 crore in 2016.
The GroupM report suggested higher radio advertising growth towards the end of 2016. “There is scope for the medium to pick up towards end 2016 when most of the new stations (set up after Phase III licenses, round 1 were issued) are fully operational,” the report said.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay High court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.
source:-
Reliance Broadcast in talks to sell Big FM stake - Livemint
