Reliance Broadcast Network (RBN), the youngest media company from the Reliance-Anil Dhirubhai Ambani Group, is allotting 1.75 million preference shares to stock market bull Rakesh Jhunjhunwala for Rs 14.88 crore.
Citigroup Global Markets Mauritius Pvt Ltd and Goldman Sachs Investments (Mauritius) Ltd are two other investors who would be investing another Rs 35 crore in the Rs 400-crore preferential allotment the company has announced. While Rs 155 crore would come from investors, the promoters are pumping in Rs 245 crore through the issue. The preference shares would be issued at Rs 85 per share.
As RBN posted a net loss of Rs 15.04 crore in the April-June quarter of this financial year and it is unlikely it would show a profit after taxes in the next two quarters, why are investors interested in this company? Tarun Katial, CEO, RBN, said the company had diversified into a number of areas and "investors who are subscribing to the preferential equity issue believe in the group's execution capabilities and believe in its growth potential".
Including the four promoters' entities, 25 others have been proposed by the RBN board for the preferential equity issue. RBN shares closed up five per cent at Rs 116 on the Bombay Stock Exchange on Thursday.
RBN runs its businesses under the brand name BIG, spread in FM radio, experiential marketing, the Out of Home (OOH, or outdoor) and digital space and to-be-launched TV channels. While there are a number of established players in all these verticals, RBN claims it has differentiated its offerings.
"Under the vertical BIG Live, we are not only doing on-ground activation but also creating Intellectual Property (IP). We recently did BIG Marathi Music Awards, for which GoodKnight was the sponsors and it was aired on ETV Marathi and Star Mazaa. We are doing a number of regional TV and film awards," said Katial. He said the company had done 300 on-ground brand activations in the past one year.
| SHARE(D) INTEREST | ||
| Proposed allottees* | No. of equity shares to be allotted | % of post issue/ allotment |
| Reliance Land Private Ltd | 21000000 | 44.57 |
| Reliance Capital Ltd | 3000000 | 6.38 |
| AAA Entertainment Private Ltd | 4900000 | 10.39 |
| Rakesh Jhunjhunwala | 1750000 | 1.88 |
| Damani Estates And Finance Private Ltd | 1000000 | 1.07 |
| Citigroup Global Market Mauritius Private Ltd | 2400000 | 2.57 |
| Goldman Sachs Investments (Mauritius) I Ltd | 1750000 | 1.88 |
| Amal N Parikh | 1000000 | 1.07 |
| Renuka Shah and Pranav Shah | 1000000 | 1.07 |
| Shailaja Finance Ltd | 1250000 | 1.34 |
| Pivotal Securities Private Ltd | 1000000 | 1.07 |
| Zuari Investments Ltd | 1250000 | 1.34 |
| * of over 1% of the preference shares | ||
Overstretch denied
Analysts, however, said RBN had dipped its fingers in too many businesses and in verticals like OOH, most players in the market have acquired properties at unviable prices, a point that Katial denies. "RBN has invested in long-term, low-risk and quick payback inventories under its vertical BIG Street. We believe that 40 per cent of RBN's revenues would be from the OOH business in the next two years." RBN had an annual revenue of Rs 185 crore in 2009-10.