Network18 jumps 20% on Independent Media Trust buy

Independent Media Trust, the entity set up by Reliance Industries ( RIL) to subscribe to optionally fully convertible debentures of Network18 Media and Investments, on Thursday acquired 27 lakh equity shares of the media firm, owned by a holding firm controlled by promoter Raghav Bahl.

The transaction saw shares of Network18 gain 20% on Thursday, as news of RIL's Media Trust buying shares of Network18, was reported on the BSE.

According to BSE bulk deal data, the Trust purchased 27 lakh shares or 1.9% of total equity from RB Holdings, a promoter company that holds 32% in Network18. Shares were bought for Rs 40.15 a piece, or for a total consideration of Rs 10.87 crore.

In early January, Reliance had said that it will fund promoters' subscription of Network18's rights issue through Independent Media Trust, described as a trust "set up for the benefit of Reliance Industries." In return, Reliance was to receive optionally fully convertible debentures.

"There is no rule stopping the trust from buying Network18 shares," said Arun Kejriwal, director at Kejriwal Investment and Research Services. An e-mail sent to Reliance Industries spokesperson did not elicit a reply.

Network18 shares hit the upper circuits of Rs 47.80 on BSE on Thursday, or 20% above its previous close. Around 28 lakh shares changed hands on BSE, seven times higher than the two-week average volume of 3.9 lakh. On both bourses, over 79 lakh shares were traded. However, the stock fell 6.7% on Friday, ending the week at 44.6.

As on December 31, 2011, RB Holdings held 4.6 crore shares in Network18 Media & Investments, or 32% of the total equity.

Of this, 2.3 crore shares were pledged as collateral to financing companies like STCI and Religare. According to exchange disclosures, the company pledged a further 2.59 lakh shares in 2012.