Deal in focus: Segulah picks up Mitt i

Given Sweden's fraught relationship between media and private equity – in particular following criticisms over the industry's involvement in the welfare sector – Segulah's acquisition of Mitt i, a Swedish newspaper company, is an interesting one. Mitt i is a paid-for-by-advertising publication covering the Stockholm area. Segulah bought the company from Stampen Media Group in June with capital drawn from its fourth fund.

While many countries continue to see declines in local newspaper circulation, Marcus Jansson, Segulah's partner who led the acquisition, says this is not the case when it comes to paid-for-by-advertising publications in the Nordic region. "National and regional subscribed newspapers may be struggling, but the more local media industry is doing quite well," he says. "These papers are very local. Mitt i covers the greater Stockholm area with a readership of around 900,000 and 31 different local editions. There are various players in this area in Sweden that are doing well."

Comparisons can be drawn to the UK-based Metro newspapers, owned by DMG Media. Earlier this year, DMG Media announced Metro's online team would be folded into its Mail Online operations. Six months earlier, Metro's London print edition had seen a year-on-year drop in circulation from 775,000 to 771,000, according to Audit Bureau of Circulations figures.

The advent of social media, localised blogs and other online platforms are often cited as having had a negative impact on local newspaper circulations. However, despite the increasing trend towards online media consumption, Mitt i's immediate future will remain in print. Jansson believes the format is ideal for local advertisers looking to reach an audience in a specific geographic area. He points to the potential for new editions – throughout Sweden and eventually other Nordic countries – as a key factor that influenced the GP's decision to invest. Selecting which regions these new editions will launch in, says Jansson, "will be one of the first items on the agenda for the new board of directors".

Print versus digital
Segulah's confidence in the growth potential within the local newspaper industry is somewhat reinforced by the recent sale of LSE-listed Mecom Group to Belgium-based media company De Persgroep. Mecom, which changed hands for a total consideration of £196m, operates primarily in the Netherlands where its regional titles enjoy a combined daily readership of approximately 2.5 million. However, it also publishes two daily titles and one weekly publication in Denmark, which has around 500,000 readers. Notably, and in stark contrast to Mitt i's immediate plans, Mecom's new owner has stated its commitment to develop the multimedia and online presences of its titles.

Despite taking only two months from point-of-contact to completion, Segulah's acquisition of Mitt i was a long time in the making, says Jansson: "We actually looked at the company six or seven years ago when it was acquired by the vendor." The eventual acquisition came about following a structured sales process run by Sweden-based corporate adviser Hjalmarsson & Partners, with Segulah already well-positioned as a result of its previous interest.

According to unquote" data, dealflow levels for European publishing companies have dropped drastically since 2007, around the time Segulah first took an interest in Mitt i. Following the financial crash, many publications that have made the move to online have struggled to monetise the growth of the rapidly expanding platform.

Nevertheless, certain segments of the media market have attracted GP investment. In December 2013, BC Partners acquired Pearson Group's UK-based news service Mergermarket for £382m, with the company later bolting on Perfect Information. In 2014, Apax Partners bought Guardian Media Group's 51.1% stake in Trader Media Group, owner of the Auto Trader brand, for a reported £600m. In doing so it secured full control of the company. What is notable about these deals is that both target companies rely heavily on databases for monetisation.

With Mitt i maintaining its commitment to print and lacking the data assets that have previously attracted private equity investment in media, it will be interesting to note the success of its local advertiser-dependent growth strategy.

Advisers
Equity – Nord & Co (Legal); Deloitte (Financial due diligence).
Vendor – Hjalmarsson & Partners (Corporate finance).

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