The digital business of Raghav Bahl and Ritu Kapur’s The Quint have been acquired by Gaurav Mercantiles Limited, a company that also has Kapur and Bahl as its promoter group. Gaurav Mercantiles was in the business of “import and trading of almonds and other products”. Effectively, Kapur and Bahl are listing The Quint via its acquisition by a publicly listed company which they themselves acquired a majority stake in, over the past year or so. It’s likely that The Quint isn’t a profitable company, and thus listing it would have been difficult. Things have been pretty difficult for Bahl and co too:
- Layoffs and furlough at The Quint: The Quint told 45 employees to go on leave without pay, following the recession given the COVID19 crisis. Some employees were paid for all of April, and others were given half the month’s pay, according to Newslaundry. The company has also reportedly waived its non-compete clause with employees, and cancelled its subscriptions to news wire services.
- BloombergQuint, a joint venture between US media company Bloomberg and Quintillion Media has had to abandon its ambitions to run a TV channel, and switch to running its online subscription product BQ Blue. Moneycontrol had reported in December that the TV channel was on the verge of falling through, and that Bloomberg was looking at other media companies to partner with. BloombergQuint had sought to broadcast on TV as far back as 2016, but in 2018 the Ministry of Information & Broadcasting declined their application, citing security concerns.
In addition, the regulatory environment for digital media has taken a turn for the worse: the Indian government reduced foreign direct investment in Digital Media companies to 26% in August 2019, and is also taking a fairly regressive approach to media regulation with the draft Regulation of Press and Periodicals bill. Given that raising foreign direct investment might be tricky, Bahl and Kapur probably have other plans, and this listing is probably a precursor to possibly raising money for The Quint.
The acquisition makes for an interesting reading:
- What has been acquired? The assets of The Quint have been acquired by Gaurav Mercantiles Limited, a company listed on the Bombay Stock Exchange. What assets?
- The Quint (www.thequint.com)
- The Quint Hindi (hindi.thequint.com)
- FIT: fit.thequint.com
This does not include Bloomberg Quint, as the company had already clarified last year [pdf]
- For how much? via a slump sale, at an enterprise value of Rs 30.58 crore, and an equity value of Rs. 12.62 crore.
- By whom? This is where it gets interesting.
- 66.42% in the Quint is owned by Raghav Bahl (56.05%) and Ritu Kapur (10.37%), the promoters of the Quint (Quintillion Media Private Limited), which was also the case, as of March 31, 2020.
- Mohan Lal Jain, also a promoter of Gaurav Mercantiles Limited is also a director on the board of Quintillion Media, and while he currently owns no shares, on a fully converted basis, he would own 4.99% of Gaurav Mercantiles, which bring the combined shareholding of Bahl and Kapur down to 63.81%. In total, the three would then hold 68.8% of shares.
- Public shareholding: 1302 shareholders, as of March 31, 2020, held 33.59% in Gaurav Merchantiles.
- What else? Two key changes, alongwith this acquisition:
- Gaurav Mercantiles Limited has re-classified six promoters of the listed company as non-promoters, given that they own no shares in the company
- It has shifted its headquarters from Maharashtra to the National Capital Territory of Delhi. The Quint’s main office is in Noida.
- How long has this been in the works? Quite a while, it would seem.
- November 27, 2018, Bahl and Kapur made an open offer for the acquisition of shares of Gaurav Mercantiles [pdf] Details of the open offer: [pdf]
- January 8, 2019: Bahl and Kapur became promoters of the company. Mohan Lal Jain became an additional director in February 26. [link]
- On May 12, 2019, the board approved altering the main objects of the company under the Memorandum of Association to undertake media and entertainment business, including a digital business.
- On May 25, 2019: Gaurav Mercantiles had issued Compulsorily Convertible Preference Shares and Equity Warrants to Bahl and Kapur, “wherein the Relevant Date was April 12, 2019.”
- On July 17, 2019: The board of directors of Gaurav Mercantiles had discussed the proposal to acquire the digital business of the Quint [pdf].
- The Quint’s revenues for the last 3 years:
- FY17: Rs. 3.35 crore
- FY18: Rs. 7.25 crore
- FY19: Rs. 11.1 crore
- Gaurav Mercantiles’ revenues for the last four years:
- FY16: Rs. 41.91 lakh
- FY17: Rs. 1.94 crore
- FY18: Rs. 1.53 crore
- FY19: Rs. 48.51 lakh
We wouldn’t be surprised if Gaurav Mercantiles is renamed. The Quint Limited, perhaps?