Network18 nets Rs 45cr pretax gain from Bookmyshow sale

Network18 Group has diluted its stake in India's premier entertainment ticketing website - Bookmyshow.com but continues to be the single largest shareholder with a 40% stake. It has sold 20% stake to  Accel Partners for pre-tax profit of Rs 45 crore. It previous held 60% in Bigtree Entertainment Private Limited, the holding company BookMyShow.com.

Accel Partners, one of the leading global investors in internet businesses will invest Rs 100 crore into the business. The secondary stake sale by Network18 will add Rs 45 crore to the company's pre-tax profit.
In an interview with CNBC-TV18, Sai Kumar, group CEO of Network18 said the company has diluted 20% stake at primary and secondary ends and has made a profit of Rs 45 crore from the transaction. Moreover, the CEO is hopeful of more such announcements in the next six to nine months. Here is the edited transcript of the interview on CNBC-TV18. Q: Can you take us through this transaction itself? How much has it fetched the company and what will it mean to the balance sheet, the P&L of Network18?
A: Just a minor correction, we have not sold off completely. This has been a dilution of 20%.
We are extremely satisfied with this deal. Bookmyshow.com has been a successful poster child of Indian digital e-commerce. We invested in it at a very early stage of this company. We are thrilled that someone like Accel Partners who is one of the blue blooded investors has joined this partnership.
We have diluted about 20% at the primary and secondary level. We continue to be the single largest shareholder because we continue to believe in this business, in the management of this business and we continue to believe in the growth prospects of this business.
To that end, it met two objectives of Network18. One was, as we had promised investors at the beginning of this year, to ensure that we start monetising some of our meaty assets. To that end we would make a tidy profit of about Rs 45 crore on this transaction.
Secondly, the residual stake that we have which is about 40% would currently be valued at Rs 160 crore and we are very satisfied with it. We see this as a business that will continue to grow at a rapid clip. It is one of the only profitable e-commerce businesses in this country.
Unfortunately, e-commerce businesses and profitability, if you look at other segments of this business, it does not go hand in hand. This is a business that has proven to be profitable for two consecutive years and we stay invested. Q: Should we expect monetising of more such assets in the days to come. Should we hear something in FY13 itself?
A: That is the endeavour. There is a vigorous process going on at the backend to ensure that many of our assets that we invested in the last five or six years, where we were focused on an expansion spree, are now ripe for monetisation.
Earlier in the quarter, we made a small exit in NetworkPlay, a very profitable exit. Bookmyshow is the second one. It will be fair to say that in the next six to nine months, one should expect more such announcements. Disclaimer: Moneycontrol.com is part of the Network18 Group.