linkedin
ET Prime
Investigation

Will a little-known ship breaker help Raghav Bahl raise funds from the market?

Bahl-promoted digital-media startup explores reverse merger for listing even as several central agencies probe various aspects of the business.
font size
FONT SIZE
save
SAVE
saved
SAVED
Gift this article
nsundareshasubramanian
5 Jul 2019 7 Mins Read 0 comment
Raghav Bahl speaks at the Taj Lands End, Mumbai after the launch of his book Superpower? on August 26, 2010. Getty Images
Raghav Bahl speaks at the Taj Lands End, Mumbai after the launch of his book Superpower? on August 26, 2010.
Raghav Bahl, media mogul and a man of many a creative deal in the past, including the three-way transaction to sell the Network18 group to Mukesh Ambani’s Reliance Industries, has embarked on another ambitious journey. If he succeeds, it will put his five-year-old digital media startup Quintillion Media on a different orbit, opening up new funding opportunities. While there is speculation that the new structure could help with the pending broadcasting licences, some market experts suggest that this would be a fast-track listing option for Quint and could have saved anywhere between a few months to a couple of years in regulatory clearances and procedures for a regular initial public offering (IPO), not to mention the detailed disclosures. The Quintillion structure Bahl, who began his career as a correspondent with Doordarshan over three decades ago, launched a business news channel under the TV18 brand in the late 1990s in collaboration with US broadcaster CNBC. In the boom years of stock markets between 2003 and 2008, the group saw tremendous growth and diversified into general news, entertainment, and movie production. However, the slowdown that followed the global financial crisis and falling revenues led the group into a debt trap. In 2012, Bahl received funding from Reliance group entities and eventually exited the company two years later. He is said to have walked off with a few hundred crores in his kitty. Latest filings put his personal net worth at about INR1,091 crore. Months later, it was time for a new start. Keeping up with his obsession for the lucky number ‘18’, Quintillion, a number with 1 followed by 18 zeroes, was picked and Quintillion Media was born. The Quint portal was positioned as a millennial’s first stop for news. It focused on a mobile-first strategy armed with videos and short stories to grab the attention span of younger readers. Quintype, a subsidiary focused on building digital-publishing tools for portals such as Quint, was also floated. Quintillion Media set up a subsidiary called Quintillion Business Media and tied up with Bloomberg News with plans to launch a business news channel. But the endless wait for licensing meant Bloomberg Quint became a portal dedicated to business news. Bahl also occasionally appeared on videos, explaining some critical events such as demonetisation. Quintillion also made investments in other media ventures such as Spunklane, which runs thenewsminute.com, a portal that focuses on southern states; YKA Media, which runs Youth ki Awaz; and Darwin Media India, a joint venture with a German educational-programming portal. Among these businesses, only the Quint portal is now heading to the stock markets. Over the past year or so, Bahl has been facing probes by investigating agencies over his investment in another listed firm called PMC Fincorp. Bahl invested INR3.03 crore in the penny-stock company promoted by one Raj Kumar Modi in 2011. In the next three years, Bahl and his wife offloaded the majority of their shares. The total value of their shares was over INR118 crore at the time of sale. After Quint offices were raided in October 2018, Bahl issued a detailed statement calling the raids an intimidation tactic. Around the same time, reports also said the TV channel licence was stuck because of “security” concerns. It is in this backdrop, Bahl took the first steps to take The Quint to the market. Penny stock Number 2 Late last year, Bahl and his wife Ritu Kapur acquired a controlling stake (66.42%) in a little-known listed firm Gaurav Mercantiles for a measly sum of Rs5.64 crore. They would spend another INR2 crore on the open offer. While the acquisition price was INR42.5 per share, the stock has been on a gallop ever since. On Wednesday, it closed at over thrice this price on the BSE. In fact, when asked by the exchange in March, the management replied that though it could not explain the price movement, it hinted the acquisition by reputed acquirers and the open offer that followed as the probable triggers for the excitement. But the market seems to have known a bit more. Gaurav Mercantiles was earlier engaged in ship breaking, trading, and investment. “However, with the liberalisation of imports, the trading activities were marginalised. The investment portfolio of the company is also being diluted. Therefore, the company has been concentrating on ship breaking activities for several years now,” the company’s website says. The three-decade-old firm promoted by the Bohra family had about 1,200 shareholders and was thinly traded. “However, we now propose to diversify to purchase of old factories for dismantling and sale thereof, as mentioned above also. From time to time, we may even undertake import and local trading of scrap and coal, as mentioned above, though this activity has not yet been commenced by us. The same is expected to push up the level of our operations as well as the operating results sizably,” the website says. “The level of operations was kept lower in the past by a conscious decision of the management when the market conditions were volatile. This has been a consistent trait of our management,” it adds. Interestingly, the open offer documents filed after the Bahl and his wife took over said the company was into almonds trading. All that is set to change now as Gaurav Mercantiles has set its eyes firmly on Bahls’ mainstay: media and entertainment. The new board of Gaurav Mercantiles, which includes Bahl and Kapur, will meet on July 17. In a BSE filing the company said the board will meet and “consider the preliminary proposal to acquire the digital-content business of Quintillion Media Private Limited, a company owned and controlled by Raghav Bahl and Ritu Kapur, operated under the name and style of ‘The quint’.” Quintillion Media also holds a 74% stake in Quintillion Business Media, which runs the portal Bloomberg Quint. Investment banking sources say the takeover of Gaurav Mercantiles itself is still awaiting Sebi nod and all these moves would be subject to the outcome. Need for funds ET Prime sent a detailed questionnaire to Bahl seeking comments on the proposed valuation and the scope of the transaction and whether investors such as Bloomberg News would get an exit through this transaction. Gaurav Mercantiles in its response clarified that Bloomberg Quint would not be a part of this transaction. An industry veteran who has worked with Bahl in the past, says, “Raghav is a financially savvy person. He has been creative with his finances and he would not do this for the heck of it. I’m sure it is a well-thought-through plan. Doing a reverse merger doesn’t mean anything unless you have an equity raise. I assume all this leads to an equity raise.” He also adds, “Clearly, the government is not giving a licence. It is a matter of intent. Even if this rejig helps him launch a business news channel, he would still need funds. A business channel is not a business that is going to throw cash from day one.” Quintillion Media filings show Bahl recently infused INR50 crore through a placement of debentures. Last few months have not been easy for the Bahls with several central agencies such as the income-tax department and enforcement directorate probing various aspects of the business. Bahl even made an open appeal to union finance minister Nirmala Sitharaman for an audience to explain his position. According to an investor in media companies, the move could also be to ensure a quick listing in an adverse environment. “Given the environment in which several proceedings have been initiated against the promoters of Quint and the group itself, it could have faced difficulties in getting clearances for listing through the regular route. They could have just delayed asking for various clarifications. Also, all the pending cases and proceedings would have to be disclosed. The reverse merger route allows a convenient backdoor entry. Also, the NCLT-approved amalgamation process would allow the business to start with a clean slate.” In response to an e-mail seeking comments sent to Bahl, a compliance executive of Gaurav Mercantiles responded: “As you would clearly observe from the stock exchange intimation, the board of directors of Gaurav Mercantiles at its meeting on July 17, 2019 will inter-alia consider the preliminary proposal in relation to acquisition of digital-content business of Quintillion Media — operated under the name and style of ‘ The Quint’. In this regard, Gaurav Mercantiles would like to unequivocally clarify that the preliminary proposal that will be considered by the board of directors of the company only relates to acquisition of ‘The Quint’ (the digital-content business of Quintillion Media Private Limited) and does not involve any proposal to acquire any other business of Quintillion Media Private Limited, including but not limited to the business carried on via Quintillion Business Media Private Limited. Further, we would like to inform, the shareholders of Gaurav Mercantiles had vide postal ballot resolutions dated May 12, 2019 had inter-alia approved a) change in object clause to undertake a new line of activity in the media and entertainment space, including but not limited to digital media and content business and b) undertaking preferential allotment of CCPS (compulsorily convertible preference shares) and equity warrants to promoters and identified investors.” The filings show the approvals allow allotment of 2 million CCPS and 14.5 million equity warrants at the acquisition price of INR42.5 apiece. Total infusion at this price would amount to around INR70 crore. On Thursday, Gaurav Mercantiles shares were locked at the upper circuit at INR134.30 on the BSE. (Research support by Rochelle Britto) (Graphics by Sadhana Saxena)
Raghav Bahl, media mogul and a man of many a creative deal in the past, including the three-way transaction to sell the Network18 group to Mukesh Ambani’s Reliance Industries, has embarked on another ambitious journey. If he succeeds, it will put his five-year-old digital media startup Quintillion Media on a different orbit, opening up new funding opportunities. While there is speculation that the new structure could help with the pending broadcasting licences, some market experts suggest that this would be a fast-track listing option for Quint and could have saved anywhere between a few months to a couple of years in regulatory clearances and procedures for a regular initial public offering (IPO), not to mention the detailed disclosures. The Quintillion structure Bahl, who began his career as a correspondent with Doordarshan over three decades ago, launched a business news channel under the TV18 brand in the late 1990s in collaboration with US broadcaster CNBC. In the boom years of stock markets between 2003 and 2008, the group saw tremendous growth and diversified into general news, entertainment, and movie production. However, the slowdown that followed the global financial crisis and falling revenues led the group into a debt trap. In 2012, Bahl received funding from Reliance group entities and eventually exited the company two years later. He is said to have walked off with a few hundred crores in his kitty. Latest filings put his personal net worth at about INR1,091 crore. Months later, it was time for a new start. Keeping up with his obsession for the lucky number ‘18’, Quintillion, a number with 1 followed by 18 zeroes, was picked and Quintillion Media was born. The Quint portal was positioned as a millennial’s first stop for news. It focused on a mobile-first strategy armed with videos and short stories to grab the attention span of younger readers. Quintype, a subsidiary focused on building digital-publishing tools for portals such as Quint, was also floated. Quintillion Media set up a subsidiary called Quintillion Business Media and tied up with Bloomberg News with plans to launch a business news channel. But the endless wait for licensing meant Bloomberg Quint became a portal dedicated to business news. Bahl also occasionally appeared on videos, explaining some critical events such as demonetisation. Quintillion also made investments in other media ventures such as Spunklane, which runs thenewsminute.com, a portal that focuses on southern states; YKA Media, which runs Youth ki Awaz; and Darwin Media India, a joint venture with a German educational-programming portal. Among these businesses, only the Quint portal is now heading to the stock markets. Over the past year or so, Bahl has been facing probes by investigating agencies over his investment in another listed firm called PMC Fincorp. Bahl invested INR3.03 crore in the penny-stock company promoted by one Raj Kumar Modi in 2011. In the next three years, Bahl and his wife offloaded the majority of their shares. The total value of their shares was over INR118 crore at the time of sale. After Quint offices were raided in October 2018, Bahl issued a detailed statement calling the raids an intimidation tactic. Around the same time, reports also said the TV channel licence was stuck because of “security” concerns. It is in this backdrop, Bahl took the first steps to take The Quint to the market. Penny stock Number 2 Late last year, Bahl and his wife Ritu Kapur acquired a controlling stake (66.42%) in a little-known listed firm Gaurav Mercantiles for a measly sum of Rs5.64 crore. They would spend another INR2 crore on the open offer. While the acquisition price was INR42.5 per share, the stock has been on a gallop ever since. On Wednesday, it closed at over thrice this price on the BSE. In fact, when asked by the exchange in March, the management replied that though it could not explain the price movement, it hinted the acquisition by reputed acquirers and the open offer that followed as the probable triggers for the excitement. But the market seems to have known a bit more. Gaurav Mercantiles was earlier engaged in ship breaking, trading, and investment. “However, with the liberalisation of imports, the trading activities were marginalised. The investment portfolio of the company is also being diluted. Therefore, the company has been concentrating on ship breaking activities for several years now,” the company’s website says. The three-decade-old firm promoted by the Bohra family had about 1,200 shareholders and was thinly traded. “However, we now propose to diversify to purchase of old factories for dismantling and sale thereof, as mentioned above also. From time to time, we may even undertake import and local trading of scrap and coal, as mentioned above, though this activity has not yet been commenced by us. The same is expected to push up the level of our operations as well as the operating results sizably,” the website says. “The level of operations was kept lower in the past by a conscious decision of the management when the market conditions were volatile. This has been a consistent trait of our management,” it adds. Interestingly, the open offer documents filed after the Bahl and his wife took over said the company was into almonds trading. All that is set to change now as Gaurav Mercantiles has set its eyes firmly on Bahls’ mainstay: media and entertainment. The new board of Gaurav Mercantiles, which includes Bahl and Kapur, will meet on July 17. In a BSE filing the company said the board will meet and “consider the preliminary proposal to acquire the digital-content business of Quintillion Media Private Limited, a company owned and controlled by Raghav Bahl and Ritu Kapur, operated under the name and style of ‘The quint’.” Quintillion Media also holds a 74% stake in Quintillion Business Media, which runs the portal Bloomberg Quint. Investment banking sources say the takeover of Gaurav Mercantiles itself is still awaiting Sebi nod and all these moves would be subject to the outcome. Need for funds ET Prime sent a detailed questionnaire to Bahl seeking comments on the proposed valuation and the scope of the transaction and whether investors such as Bloomberg News would get an exit through this transaction. Gaurav Mercantiles in its response clarified that Bloomberg Quint would not be a part of this transaction. An industry veteran who has worked with Bahl in the past, says, “Raghav is a financially savvy person. He has been creative with his finances and he would not do this for the heck of it. I’m sure it is a well-thought-through plan. Doing a reverse merger doesn’t mean anything unless you have an equity raise. I assume all this leads to an equity raise.” He also adds, “Clearly, the government is not giving a licence. It is a matter of intent. Even if this rejig helps him launch a business news channel, he would still need funds. A business channel is not a business that is going to throw cash from day one.” Quintillion Media filings show Bahl recently infused INR50 crore through a placement of debentures. Last few months have not been easy for the Bahls with several central agencies such as the income-tax department and enforcement directorate probing various aspects of the business. Bahl even made an open appeal to union finance minister Nirmala Sitharaman for an audience to explain his position. According to an investor in media companies, the move could also be to ensure a quick listing in an adverse environment. “Given the environment in which several proceedings have been initiated against the promoters of Quint and the group itself, it could have faced difficulties in getting clearances for listing through the regular route. They could have just delayed asking for various clarifications. Also, all the pending cases and proceedings would have to be disclosed. The reverse merger route allows a convenient backdoor entry. Also, the NCLT-approved amalgamation process would allow the business to start with a clean slate.” In response to an e-mail seeking comments sent to Bahl, a compliance executive of Gaurav Mercantiles responded: “As you would clearly observe from the stock exchange intimation, the board of directors of Gaurav Mercantiles at its meeting on July 17, 2019 will inter-alia consider the preliminary proposal in relation to acquisition of digital-content business of Quintillion Media — operated under the name and style of ‘ The Quint’. In this regard, Gaurav Mercantiles would like to unequivocally clarify that the preliminary proposal that will be considered by the board of directors of the company only relates to acquisition of ‘The Quint’ (the digital-content business of Quintillion Media Private Limited) and does not involve any proposal to acquire any other business of Quintillion Media Private Limited, including but not limited to the business carried on via Quintillion Business Media Private Limited. Further, we would like to inform, the shareholders of Gaurav Mercantiles had vide postal ballot resolutions dated May 12, 2019 had inter-alia approved a) change in object clause to undertake a new line of activity in the media and entertainment space, including but not limited to digital media and content business and b) undertaking preferential allotment of CCPS (compulsorily convertible preference shares) and equity warrants to promoters and identified investors.” The filings show the approvals allow allotment of 2 million CCPS and 14.5 million equity warrants at the acquisition price of INR42.5 apiece. Total infusion at this price would amount to around INR70 crore. On Thursday, Gaurav Mercantiles shares were locked at the upper circuit at INR134.30 on the BSE. (Research support by Rochelle Britto) (Graphics by Sadhana Saxena)

Gift this story

0 article remaining this month.
300 characters remaining

Done, keep sharing

0 Left this month

We have e-mailed a link of this article to your friends. They would be able to access this article 0 times till the link expires.

Sorry, quota exhausted

0 article shares left

You have exhausted your quota of gift article shares for this month. Your limit will be reset on the 1st of next month.

Current Edition

[[^message]]

Result

[[/message]] [[#message]]

[[message]]

[[/message]]