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December 24, 2005

Bennett Coleman portfolio crosses 40

The tally of companies in which Bennett, Coleman & Co. (BCCL), the publishers of Times of India and Economic Times, has acquired stakes has crossed 40, according to a Businessworld article.

In fact, it has become one of the biggest portfolio investors with Rs 700 crore already deployed in a clutch of companies that will earn it a neat packet when they go for their IPOs. And it's still buying.

The article goes on to explain how BCCL's "private treaties" work:

In the portfolio investments, BCCL seems to be picking high-growth SMEs headed for IPOs. They need media space to build their brand and corporate image. BCCL, says Rajshekhar, is "helping emerging companies realise the power of advertising". He heads a division called 'private treaties'. The typical deal is a cash payment for a small equity stake, say, 5-10 per cent. The deal size varies from Rs 9 crore-100 crore. So far, BCCL is dipping into its considerable cash reserves of Rs 2,379 crore to strike these deals. This money is then spent by the investee company on buying media space in BCCL brands. In effect, the money comes back to BCCL. Plus, BCCL stands to make a stash when it exits. Nice accounting move. But why not get companies to advertise straightaway? Rajshekhar reckons these companies are in their growth phase and have other working capital priorities. To convince them about the power of advertising, private treaties works best.

Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.