Infibeam has raised Rs 40 crores from Network18, the Reliance Industries owned media group, in what has been called a strategic investment. In a filing with the BSE, Infibeam has said that TV18 Broadcast Limited is subscribing to 21,45,002 fully convertible warrants (one Equity Share per warrant) at an aggregate consideration not exceeding Rs 40 Crore, on preferential issue basis at a conversion Price of Rs. 186.48/- per Equity Share (including premium). According to a notice to the BSE, post the conversion, Network18 would hold 0.32% of Infibeam.
Why this deal?
The deal, structured and executed by Capital18, will lead to Infibeam integrating “multiple platforms of Network18 Group assets to build large customer base with its differentiated offerings”. It also says, vaguely, that “Infibeam’s offerings are targeted towards both businesses and direct consumers, and hence Network18 group’s assets, which have a strong presence across relevant audiences are a perfect fit to propel the next leg of growth for the company.” A notice to the BSE says that “The object(s) of the issue is to augment the resources for Brand Building, Advertisements, M&A Activity, General Corporate Purposes of the Company and for any other purpose as permitted under applicable laws.”
Thus, there’s no clear indication of why Infibeam raised money from Network18, and why Network18 invested in Infibeam. Any guesses?
Remember that the Network18 group used to have an ecommerce business in Homeshop18, and Infibeam is probably more of an ecommerce platform business than one that competes directly with the likes of Flipkart or Amazon. Homeshop18 was a lost opportunity for the Network18 group – it was a company heading to an IPO until the acquisition of Network18 by Reliance Industries scuttled those plans. Homeshop18 then shut down its internet business, and eventually merged with STAR CJ.