MUMBAI: The Foreign Investment Promotion Board (FIPB) has formally cleared the application filed by Sri Adhikari Brothers News and Television Network Limited (the name has changed to Broadcast Initiatives Ltd).

The approval is part of the procedure for news channels planning to raise funds through an initial public offer (IPO) to induct investments from non-resident Indians (NRIs) or foreign institutional investors (FIIs). The company has filed a Draft Red Herring Prospectus for an IPO.

Broadcast Initiatives Ltd, the Sri Adhikari Brothers promoted company through which Janmat news and views channel was launched, proposes to issue 8,550,000 equity shares of Rs 10 each for cash at a premium to be decided through the book building process. The issue would constitute 44.27 per cent of the fully diluted post issue equity capital of the company. Post-issue, the promoter holding would be 55.73 per cent.

As per the prescribed government norms, the FIIs can invest in news and current affairs channel and companies managing them, but the total foreign investment component is capped at 26 per cent, whereby the FII investment has to be part of the total foreign investment allowed, including foreign direct investment.

For any such induction, the news broadcaster has to obtain a no objection certificate from information and broadcasting ministry as well as the FIPB approval for the shares issued to the NRIs/FIIs.

In its application last month, the Adhikari Brothers had said that it "proposes to induct foreign equity partner up to 26 per cent through the IPO/Public issues."

On the same day, the FIPB had also approved a proposal of Reuters Group Plc to invest in the Times Global Broadcasting Co. Ltd's, which manages the six month old English news and current affairs channel Times Now. The ministry has approved an investment of Rs 221 million by the Reuters in the Times Global Broadcasting for uplinking and broadcasting news and current affairs television channels from India.

The clearances are part of a package okayed by finance minister P Chidambaram based on the recommendations of the FIPB in its meeting held on 29 June 2006. The total package approved by the FM amounts to Rs 7.62 billion.