The Blackstone Group has announced an investment of US$50 mn (Rs2.25 bn) in Jagran Media Network Private Limited pending approvals from FIPB. We find the investment to be positive even though it is at the holding company level (Jagran Media) and not the listed operating company level (Jagran Prakashan/JAGP). For starters, it helps untangle the web of individual promoter holdings in JAGP ; investors have raised concerns in the past on the impact of any family dispute on the day-to-day operations of JAGP. As per the terms of the investment, Jagran Group’s/promoter’s holding in JAGP (55%) will be consolidated in Jagran Media, the holding company, which will demarcate the ownership and management of JAGP. Blackstone’s stake in Jagran Media with board representation (we presume) will further facilitate this separation.
Additionally, the US$50 mn investment provides flexible liquidity for JAGP to pursue inorganic growth opportunities. JAGP has a strong balance sheet with significant net cash and does not require capital for its core markets, notably strengthening the Dainik Jagran (flagship daily) and I-Next (flanking youth compact) brands in the face of emerging competition from Hindustan (in Uttar Pradesh-Uttaranchal market) and Dainik Bhaskar (Bihar-Jharkhand market). Acquisition of strong local print players may be the preferred mode of print consolidation and entry into new markets (at the right valuations, of course) versus the time, cost and uncertainty of organic expansion. More important, JAGP management has clarified that Jagran Media will remain only a holding company and all media expansions will be routed through JAGP.
