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23
November 2016
Reliance Capital on Wednesday announced
that it will be selling 49 per cent stake in its radio business and 100 per cent
interest in the TV arena to Zee Group that will not just cut Rs 1,900 crore in
debt but also unlock shareholder value.
The Total Investment & Insurance Solutions
The deal pegs the enterprise value of
the radio and general entertainment TV business at Rs 1,900 crore, the company
said in a filing with the stock exchange. The deal involved the popular 92.7
BIG FM radio channel. The Total
Investment & Insurance Solutions
"The entire proceeds from the stake
sale will be used to reduce Reliance Capital's debt by Rs 1,900 crore ($283
million) upon final completion of stake sale transactions. Both these
transactions have been approved by the boards of respective companies and are
expected to be completed by next year, subject to applicable approvals,"
the company said. The Total Investment
& Insurance Solutions
"We are happy to bring in Zee Media
as our partner in the Radio business and divest 100 per cent of our general
entertainment TV business to Zee Entertainment," said Sam Ghosh, Executive
Director and Group CEO of Reliance Capital. The Total Investment & Insurance Solutions
"This transaction is part of our
strategy to reduce exposure in non-core business of media and entertainment and
work towards further reducing our debt under Reliance Capital."
Immediately after the regulatory filing,
the shares of Reliance Capital rose to Rs 431.40 -- up Rs 11.55 or 2.75 per
cent. Ernst and Young was the financial advisor to Reliance Broadcast Network
for the transactions. The Total
Investment & Insurance Solutions
Rajiv Singh, COO of Zee Media Corp, said
his group was looking forward to the partnership with Reliance Capital, and
that it will help the group reach out to a larger audience base.
"This transaction shall bring about
the desired business diversity and will help in achieving the sound financial
objectives at an accelerated pace. We are confident that this investment will
enhance value for all stakeholders," Singh said. The Total Investment & Insurance Solutions
Punit Goenka, Managing Director of Zee Entertainment,
said that by virtue of the deal, Big Magic will give his group access to comedy
genre enhancing the customer offerings. "Big Ganga, a leading Bhojpuri
channel, syncs with our strategy of expanding into the regional markets which
offers attractive growth potential." The Total Investment & Insurance Solutions
Reliance Broadcast Network said it runs
a network of FM Radio channels in India under the brand name of 92.7 Big FM,
reaching out to 45 cities, 1,200 towns and over 200 million people. It will be
transferring the 45 operational and 14 new channels into two special investment
vehicles.
Zee Group will acquire 49 per cent stake
in each of these two vehicles. Both companies shall also have an option for
acquiring the balance 51 per cent stake in the vehicles after the stipulated
lock-in period.
The General Entertainment TV
broadcasting business currently comprises of two channels -- Big Magic and Big
Ganga. Big Magic is a Comedy channel catering to Hindi Speaking Markets while
Big Ganga is a leading Bhojpuri entertainment channel catering to audiences in
Bihar, Jharkhand and the Purvanchal region. The Total Investment & Insurance Solutions
Both these channels would be merged into
ZEEL as part of this transaction.The
Total Investment & Insurance Solutions
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