Venture capitalist Srini Raju is in talks with private equity players to sell as much as 35 per cent stake in Associated Broadcasting Company (ABCL) that runs the TV9 regional channels.
Sources in the know said iLabs Venture Capital Fund promoted by Raju recently decided to reduce its equity exposure to 25 per cent in the company from the present 60 per cent. As many as three merchant bankers are involved with the ongoing negotiations for stake sale.
"We have received some proposals. None of them are in the closure stage as yet," an official of the VC fund told Business Standard on condition of anonymity while confirming the development.
With regard to the present valuations and the offers given by the PE players, the official said everything was at a very preliminary stage now. "It may take a month to tell anything concrete."
ABCL currently operates seven regional channels, two in Telugu, one in Kannada and one in English for Karnataka, and one each for Gujarat and Maharashtra. It recently bought 20 per cent stake in India Vision channel that operates in Kerala.
ABCL provides news, current affairs and entertainment through satellite television channels in India apart from offering them as a part of Indian channel package on Dish Network in the US.
TV9 Chief executive officer Ravi Prakash and his associates own 20 per cent promoters' equity in ABCL while the remaining 80 per cent was originally held by iLabs Capital, which invested from its first round of fund in TV9 in 2004. It has invested close to Rs 80 crore, according to sources.
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iLabs' holding in ABCL had come down to the present level after it sold around 20 per cent stake to US-based VC fund SAIF Partners a couple of years ago. According to media reports, SAIF acquired 15 per cent stake in the company from iLabs Capital at Rs 51 crore.
People close to Raju said there was nothing unusual in the timing of the stake sale and that any venture fund would look for exit within a period of 2 to 8 years after making the investment.
It had raised $120 million in first round, $220 million in second and $360 million in the present (third) round for India-centric investments that are currently spread across a portfolio of over 30 companies.
It is learnt that iLabs Capital was not keen on further infusion of funds into the company as was desired by TV9 promoters for expansion plans. Raju's decision to sell a major portion of his stake may indirectly help the company attract new PE firms.
A senior official in TV9 said the company was planning to launch three new channels, one for the Delhi NCR region, a Tamil channel and a pure entertainment channel in Telugu in the next one year. "Funding plans are currently at the drawing board stage as we are yet to decide on how much to raise from banks and from internal resources. We are confident that most of our funding requirements would be generated from internal resources," the official said.
According to CARE rating agency, TV9 promoters had brought in an unsecured loan of Rs 45.