Preeti Saxena, Equity Analyst, SMC India explains, “The major revenue drivers of the media industry are getting a boost which in turn 
is luring the PE investors.” The advertising revenue (which is the largest source of income for most media companies) is expected to shoot up in coming years. Currently the Indian advertising industry is worth Rs.196.4 billion and is expected to grow at a CAGR of 18% for next five years to touch the magical figure of a staggering Rs.453 billion. This in itself indicates that there is a huge unexploited potential in the industry, which is what is pulling the PE industry towards them.
Analysts say that another big reason for rising PE investments in media is the loosening up of government policies, besides lower valuation of the media companies at present. “Generally a PE investment ranges for a stake between 5-25% depending upon the valuations in the industry and of the company. But the PE investments in the media sector have been of a slightly higher stakes ranging between 10-30%, reason being lower valuations of the media company,” told Anubhav Gupta, Investment analyst, KIM ENG Securities India (P) Ltd. In fact, PE investors manage to garner a higher stake in a media company for a lesser price as compared to other sectors like banking or infrastructure. When 4Ps B&M spoke to industry experts they were of the view that this pattern of buying out stakes of around 10-30% (as is the case in most such PE transactions) is expected to continue for another couple of years unless the valuations of media companies change dramatically.
What’s more, the growing wave of consolidation and structural changes in the sector is only going to grow bigger and better in the country, forcing the valuation graphs of media businesses to move northwards. Little surprise that the PE Lords are smiling and benignly at that.
is luring the PE investors.” The advertising revenue (which is the largest source of income for most media companies) is expected to shoot up in coming years. Currently the Indian advertising industry is worth Rs.196.4 billion and is expected to grow at a CAGR of 18% for next five years to touch the magical figure of a staggering Rs.453 billion. This in itself indicates that there is a huge unexploited potential in the industry, which is what is pulling the PE industry towards them.Analysts say that another big reason for rising PE investments in media is the loosening up of government policies, besides lower valuation of the media companies at present. “Generally a PE investment ranges for a stake between 5-25% depending upon the valuations in the industry and of the company. But the PE investments in the media sector have been of a slightly higher stakes ranging between 10-30%, reason being lower valuations of the media company,” told Anubhav Gupta, Investment analyst, KIM ENG Securities India (P) Ltd. In fact, PE investors manage to garner a higher stake in a media company for a lesser price as compared to other sectors like banking or infrastructure. When 4Ps B&M spoke to industry experts they were of the view that this pattern of buying out stakes of around 10-30% (as is the case in most such PE transactions) is expected to continue for another couple of years unless the valuations of media companies change dramatically.
What’s more, the growing wave of consolidation and structural changes in the sector is only going to grow bigger and better in the country, forcing the valuation graphs of media businesses to move northwards. Little surprise that the PE Lords are smiling and benignly at that.
Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus
3 comments:
IIPM the best MBA School in Delhi
IIPM GOTA Programme is truly world class
Great article nice information
Post a Comment