Dentsu Webchutney

Update 2: Dentsu has informed (pdf) that as per the terms of the agreement, Webchutney will become a wholly owned subsidiary of Dentsu India by 2017. Dentsu also informed that Webchutney has registered a gross profit of 17.12 crore for the financial year ending March 2013.

Update (May 23): Webchutney CEO Sidharth Rao has said in a blogpost that Dentsu has acquired 80% stake in Webchutney but the company will continue to operate independently in India.

Earlier (May 23): Network18’s venture capital arm Capital18 has inked (pdf) an agreement with Dentsu India group to offload its entire stake in the digital advertising agency and consulting firm Webchutney for an undisclosed amount.

While the financial terms of this agreement were not disclosed, Network18 informed that this divestment was in line with its strategy of monetizing its investments and claimed the investment has generated a return of over 300% to the company. Network18 held 70.06% stake in the company, through its investment arms Capital18 Limited Mauritius which held 49.42% stake and Capital18 Fincap Private Limited which held 20.64% stake.

We’ve been hearing about this development for a while and a report from December 2012 had suggested that Dentsu was in advanced talks to acquired Webchutney and had pegged the deal size to be between Rs 40 crore and Rs 60 crore. Capital18 had neither confirmed or denied this development to Medianama then. For the fiscal 2012, Webchutney had registered a profit of Rs 6.35 crore on total revenue of Rs 21.55 crore.

This is Dentsu’s first acquisition in digital, although it had acquired a 51% stake in Mumbai-based Indian advertising agency, Taproot India, earlier this year. That being said, we have seen a significant number of acqusitions in the past year. French advertising and public relations company Publicis Groupe had acquired Neev technologies last month, which was the group’s fifth acquisition in India in the last two years.

IPG Mediabrands, the media holding group of Interpublic group had acquired the digital marketing agency Interactive Avenues last month while the media and digital communications group Aegis Group plc had acquired a digital performance marketing and search agency Communicate 2 In August 2012. The WPP group had also acquired 51% in Hungama’s digital agency arm, via JWT Singapore in June 2012.

Network18 Divestments: This is the fourth divestment made by Network18 in the last year. In February 2012, Network18 sold online business directories YellowPages.co.in and AskMe to Getit Infoservices. In December 2012, it offloaded 77.5% stake in the financial data and news terminal business NewsWire18 to Samara Capital for Rs 90 crore.

In March 2012, Network18 sold its entire stake in one of its Capital18 investee NetworkPlay to Gruner + Jahr, a media company which is a part of Germany’s Bertelsmann group. Network18 also diluted its stake by 20% in the movie and event ticketing website BookMyShow, when BookMyShow raised Rs 100 crore from Accel Partners in August 2012.