Edelweiss Financial Services has been putting together the deal, which has been 'agreed in principle', with a combination of an equity fund and a media house from western India that are jointly acquiring iLabs' stake in the company.
A source close to Raju said it might take a couple of more weeks to conclude the deal, as bankers and investors are working out last-mile details as to who brings how much funding into the deal. iLabs currently holds about 60 per cent equity in TV9.
"Also, it is still open as to whether the investors would seek to buy the entire 60 per cent equity or would want iLabs to retain a small part of it to continue our relationship with ABCL," the source told Business Standard.
Raju 'is willing to accept the offer either way'. The deal size is expected to be over Rs 500 crore (Rs 5 billion). Raju, who has been in negotiations with various prospective buyers for the last three months, was originally offered to sell 35 per cent stake.
The investor firms started discussions with Raju on the premise that they would take majority equity in ABCL, it is learnt. iLabs' stake reduced to its current level two years ago after it sold about 20 per cent stake to SAIF Partners, a venture capital fund.
The promoters holding stays at about 20 per cent held by TV9 chief executive officer Ravi Prakash and his associates. ABCL currently operates seven regional channels: two in Telugu, one in Kannada and one in English for Karnataka and one each for Gujarat and Maharashtra.
TV9 has set itself an ambitious target of expanding to more regions in the country, apart from launching an exclusive channel for the National Capital Region.
Raju's decision to exit from ABCL is expected to help TV9 mobilise the required fund, as the new investors are also said to have been equally ambitious to make TV9 a national player.
Raju invested close to Rs 80 crore (Rs 800 million) from the first round of iLabs Capital fund in ABCL — from 2004, when it started first TV9 news channel.
The new investors will be picking up a controlling stake in ABCL and plan to expand the broadcasting company into the regional GEC (general entertainment channel) space, sources familiar with the development told TOI.
"A non-disclosure agreement has been inked by iLabs and SAIF with the new investors in Mumbai on Tuesday. The definitive agreement is expected to be signed within the next few weeks," a source close to the deal said. However, when contacted, iLabs Capital officials said that they cannot comment at this stage.
It is learnt that iLabs, which currently holds around 65% stake in ABCL, may even make a complete exit from the broadcasting company. iLabs has invested around Rs 80 crore in the Hyderabad-based regional TV news player in tranches since 2004. SAIF Partners, on the other hand, owns around 15% stake in the company, which it had picked up a few years earlier.
Srini Raju, who was one of the partners of Satyam Computers much before it gained notoriety and was Satyam's COO till 2000, went on to set up iLabs Capital in 2000. Raju was also the founding CEO of Cognizant Technology Solutions. In 2007, iLabs Capital was rechristened Peepul Capital, which currently manages a capital of $700 million across its three funds with India-centric investments and has since its inception invested in around 29 companies across varied sectors.
Peepul Capital has already exited from Metlife, Intelligroup, Sify, IANS, it is still invested in ABCL and still holds stake in loyalty programme imint. In fact, ABCL is a holding company for Peepul Capital's ventures in media distribution.
TV9, a brand of ABC, started as a 24-hour Telugu news channel operating in Telugu and has since expanded into other regional languages like Gujarati, Malayalam, Bengali, Marathi, Kannada, among others and also has an English news channel.