Capital18, the corporate venturing unit of India-based Media & Investments (Network18), has made an agreement with Dentsu India Group, part of the Japan-based advertising agency group Dentsu, to divest its stake in the digital media agency Webchutney Studio for an undisclosed sum.
However, Capital18 reportedly has generated a return of over 300% on its investment, which it first made in 2007.
Capital18 held around 70% stake in Webchutney while Dentsu has acquired 80%.
The remaining 10% was sold by some existing individual shareholders, including the founders, Sidharth Rao and Sudesh Samaria.
Although the deal value has not been disclosed, sources told VCCircle that Capital18 received Rs 26 crore ($4.5m) for its 70% stake against Rs 8 crore ($1.4m) it had invested in the firm. This means Dentsu has acquired 80% for around Rs 30 crore ($5.3m) and the firm is valued at around Rs 37-38 crore ($6.7m).
Network18 invested a reported INR80m ($1.4m) in Webchutney through its investment arms, Capital18 Ltd and Capital18 Fincap, in 2007. There have been talks of a possible takeover by Dentsu since last year, which is reportedly planning to acquire 100% of the business by 2017, according to an economic Times of India report.
Raghav Bahl, managing director of Network18, said: “The divestiture of Webchutney is a reflection of our commitment to profitably monetise our investment portfolio for the benefit of our shareholders and also to facilitate the growth of these businesses to the next level.”
Webchutney was founded in 1999 and today has close to 200 employees across offices in Delhi, Mumbai and Bengaluru, and its key clients include Airtel, Unilever, MasterCard and Coca-Cola, among others. The digital agency made a gross profit of approximately INR171m ($3m) in the fiscal year ending March 2013.
Bryan, Garnier & Co. acted as financial adviser to Capital18 and other unnamed selling shareholders. India legal advisers Khaitan & Co represented Dentsu Inc. and Dentsu Media and Holdings India Private Limited.
Other exits for Network18 over the past 18 months include local search business Infomedia Yellow Pages and AskMe to Getit Infoservices as well as online movie and event ticketing firm BookMyShow and its own financial news services company, NewsWire18, which it sold to private equity firm Samara Capital for Rs 90 crore ($16.5m).