India’s largest e-commerce firm Flipkart Ltd is in talks to sell an undisclosed stake to media company Bennett, Coleman and Co. Ltd (BCCL) in a Rs.500 crore deal that will be funded partly by cash and partly by ads, four people familiar with the matter said.
Since the deal isn’t closed, none of the four wanted to be identified.
Under the proposed deal, Flipkart will issue shares to BCCL in return for cash and ads over several years in its media properties such as The Times of India and The Economic Times newspapers and ET Now and Times Now channels, the people cited above said.
One of the four added that “the talks are progressing slower than what both companies want but a deal is likely to happen”.
Flipkart and Sivakumar Sundaram, chief executive officer of Brand Capital at TOI, didn’t respond to emails seeking comment.
Theoretically, at Flipkart’s presumed $15 billion valuation, a Rs.500 crore deal would translate into a 0.5% stake.
The proposed Flipkart-BCCL deal is a so-called private treaty deal. First introduced by BCCL in 2004 to build a large portfolio of holdings, such deals were once controversial, especially because they also involved positive coverage.
Since then, however, such deals have become commonplace, transparent, and have to meet mandated disclosure norms.
At BCCL, private treaties are now handled by the company’s Brand Capital unit. HT Media Ltd, the publisher of Mint andHindustan Times, has launched its own version of such deals.
If the Flipkart deal goes through, it will boost BCCL’s already strong connections with India’s booming start-up business.
BCCL struck a similar deal with online marketplace Snapdeal (Jasper Infotech Pvt. Ltd) in February. It also has investments in a large number of start-ups such as cab-hailing service Uber, services provider Haptik and education start-up Coursera. BCCL also owns real estate listings site magicbricks.com and digital music start-up Gaana.
All told, BCCL owns or has investments in a few dozen start-ups and digital properties, many of which are held through its Internet arm, Times Internet Ltd.