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Private equity investors to invest in Future Media

Kishore Biyani's Future Group is understood to be in advanced talks with private equity investors to invest in Future Media, the division that caters to developing its retail space and malls as a media vehicle and aims to tap the Rs 900 crore market. Clearstone Venture Partners, SVB Financial Group, the parent of Silicon Valley Bank, and US-based venture capital firm Com Ventures are among the names doing the rounds.

Confirming the VC interest in his firm, Partho Dasgupta, CEO, Future Media, refused to divulge names. “We are getting private equity investors to invest in the firm. This will be a financial transaction unlike the earlier WPP one, which was a strategic one.''

Recently, GroupM, the media buying arm of the $10-billion communications behemoth WPP Group, has picked up 10% stake in Future Media. This partnership would see GroupM extending its expertise to Future Media, recently floated by Future Group to target retail space inside its own stores and malls as an outdoor media option. The partnership derives synergies from WPP's significant presence through its ad agencies JWT, O&M, Rediffusion DYR and Grey Worldwide in India. The CEO added, “WPP has a strategic investment, it is their first ever investment in this space.''

As for the valuation, he said, “We have a complete business plan for the next five years and they arrived at a valuation. Modern trade, with its huge catchments, is already a huge draw for brands that are looking to connect with the customers. New techniques like in-store TV, radio and signages provide the right vehicle for exposure.

Retailers like Spencer's and Fabmall have also forged similar tie ups with Tag Media Network, a joint venture between Tag Media Network Inc and the MAA Group, which provides hardware, software and content for in-store television advertising and programming. Biyani has been working on diluting equity in Future Group's subsidiaries such as Future Media, Future Capital, Future Logistics and Central, its mall arm, to fund his expansion plans. For the equity dilution, he is learnt to be considering various routes — IPO's, preferential allotments and strategic sale.

According to estimates by equity analyst Edelweiss Securities, of Pantaloon Retail's total requirement of Rs 4,500 crore, equity dilution would get the company Rs 1,000 crore. Quoting the company's internal projections, the research firm said that in all, Mr Biyani's company needs approximately Rs 2,300 crore from external sources, of which Rs 1,300 crore will come in the form of debt.

Source : Television Point

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