Fourth-time lucky?

It’s changed partners for the third time, it will soon have a change in name. In early December, India-focused private equity firm Samara Capital bought out Network18’s 72.5% stake in NewsWire18 for ₹90 crore. The development wasn’t a complete surprise since the Raghav Bahl-promoted Network18 has been exiting non-core businesses. Indeed, Bahl justified the deal saying, “We are today a B2C group and that is the reason to exit a B2B business such as NewsWire18.”

But what prompted a PE fund to get into the ₹ 600-crore news terminals business, where NewsWire18  (FY12 revenue: ₹ 45 crore) is a low third in a market dominated by Bloomberg and Thomson Reuters? Paurush Roy, MD, Samara Capital, believes the information services market in India is at the cusp of significant growth. “NewsWire18 is well positioned to capture this opportunity because of its understanding of the local market, customer centricity and a committed management team,” he says. 

By now, the financial wire service must be used to being taken over by ambitious buyers. In its initial avatar, it was known as Bridge News until Crisil bought it over in 2001. It seemed a synergistic fit and Crisil announced plans of becoming an information services provider, selling financial news to clients. But it didn’t work because, says an industry veteran, the necessary investments in terminals weren’t made. “There was very little idea about what to do with this business and Crisil MarketWire [or CMW, as it was called] was viewed as only an outsourced third-party news provider”. After Crisil was taken over by S&P, CMW was sold to Network18. Bahl, too, wanted to build on CMW’s news and data platforms, with the objective of reaching out to its large institutional segment but as TV18 moved away from the B2B space, that didn’t materialise.

Can Samara succeed where others failed? Pankaj Aher, CEO of NewsWire18, is certainly optimistic. He has plans to expand internationally, beginning with South East Asian markets. And Samara is “keen on financing” this, he says. “This low-cost model can be replicated in many markets outside India, including Sri Lanka and Indonesia. Samara, too, sees a big opportunity here,” Aher adds. The ambition is to be present in seven to 10 countries in five years and triple topline. But the news terminals business is a cutthroat one — there’s the overwhelming duopoly as well as the plethora of free (or nearly so) news sites on the web. Can NewsWire18 compete effectively in this space? It’s uncharted territory and Aher must be hoping that fourth time’s the charm.