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Web18 To Raise $10 M From Nokia Growth Partners; Growth Capital? Profitability?

Web18 Holdings, TV18s Internet and mobile subsidiary, has received an approval from the TV18 board to raise $10 million from Nokia Growth Partners, a venture capital fund. NGP II Mauritius Company Limited will invest “strategic growth capital” into Web18 Holdings, according to a filing with BSE last week. Web18 has previously raised $10 million in investment from Tracer Capital in October 2006.

In a brief conversation with MediaNama, Web18 CEO Surya Mantha said that the company will be investing the money in growing their existing properties, and will also seek to enhance their offerings in the mobile space, including voice based services. Web18 has primarily focused on the Internet business, and on mobile, has a mobile application, SMS based services on 51818 and 52622, and WAP sites powered by July Systems. On the specifics of where exactly such a large sum of money will be invested, Mantha said it’s too early to comment on that.

IPO Plans

IPO plans for Web18 are on hold until the market improves. Mantha said that “The IPO will be done at an appropriate time. The markets have to come back. We filed with the SEC in December. As a group (Network18) we like the capital markets and are known to unlock value.” About whether profitability is an imperative before the IPO, he said that they would like the company to be profitable. “That is something that investors would welcome.”

Investment Size; Profitability?

The quantum of the investment and plans to invest in “growth capital” is surprising since after a couple of years of being in “investment mode”, Web18 has been focusing on reducing expenses. In the last quarter (Q1-10), the company reported lower operating losses (Rs. 37.88 million, down 32.3% year on year). But it has been losing money – Web18 reported an operating loss of Rs. 380.79 for the first three quarters of the 2008-09 fiscal. Note that it did did not report financial results for Q4 last fiscal.

So will a fresh round of investment in growth activities impact the road to profitability? According to Mantha, “For a company our size and with our plan, that ($10 million) is the right amount. We’re on track (to profitability), as we were before this investment.” He declined to share a timeframe by which the company is expected to be profitable, saying only that “in the near future we will be EBITDA profitable.”

Related:

— FY09: Web18 Revenues At Rs 712.1 M Up 8%; Marketing Costs Written Off
— Q1-10: Web18 Loss Rises To Rs 86 Million; Claims Is Ahead Of Rediff, Sify
— Q1-10: TV18 Net Loss Soars To Rs. 406.6M; News Channels Revenues Tank

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