Independent News & Media's 33m (£22.5m) investment in Jagran Prakashan Ltd, the Indian newspaper publisher, is expected to be valued at three to four times the initial investment made last June when JPL raises fresh capital in 2006.
Independent News acquired 26 per cent of JPL, which is the publisher of the Dainik Jagran that translates as The Truth India's largest Hindi language newspaper. JPL plans to increase its share capital by roughly 20 per cent through a public issuance of shares.
Sir Anthony O'Reilly, chief executive of Independent News, declined to be drawn on the value of capital to be raised or the price of the new shares. However, brokers familiar with the transaction, which was notified to the Securities and Exchange Board of India on December 1, estimate that the entire JPL Group will be valued at 300m to 400m.
Sir Anthony said that interest among advertisers in reaching Hindi-language speakers has risen strongly, along with India's economic growth. "Because of the tremendous growth of the Indian economy there is now much more interest in Indian newspapers," Sir Anthony said. "If you go to New Delhi you can practically hear the economy growing."
Ad revenue growth over the past year was roughly 20 per cent, he said.
The newspaper, which sells 2m copies daily, is printed at 25 plants spread across the Hindi-speaking part of India and has computer technology capable of providing instantaneous translation into several local dialects. "This is all done without human intervention," Sir Anthony said.
As a result of the sale of new shares, Independent will see its stake shrink from 26 per cent to 20.9 per cent of JPL.
Independent's other non-English language publication, the Zulu-language paper, Isolezwe which translates as The Eye of the Nation had also performed strongly in 2005, Independent News said. Its circulation has risen to 85,000 from 25,000 since 2002.
Independent News, which issued its 2005 pre-close trading update this week, said that group-wide, it expects to report circulation growth of more than 3 per cent.
On ad revenues, the company said it expected to show broad-based growth across the leading advertising categories and double-digit advertising growth in Ireland and South Africa.
