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Tortoise Media is in advanced talks to raise funds from Gary Lubner, the South African businessman and major donor to the UK Labour party, ahead of the online start-up’s proposed takeover of Britain’s Observer newspaper.
Lubner, the former boss of vehicle windscreen repair company Autoglass, is expected to take a minority stake in Tortoise as a result of the fundraising, which one person close to the talks said would be a shareholding of less than a fifth of the business.
The transaction will proceed regardless of whether Tortoise is successful in acquiring the Observer from Guardian Media Group, although the money would be used to finance the deal should it go ahead.
Tortoise is also lining up additional funding from Standard Investments, according to one person close to the talks. The US investor, managed by David Millstone and David Winter, has stakes in digital media start-ups Puck and Graydon Carter’s Air Mail, as well as in publisher Spiegel & Grau.
GMG announced last month it was in talks with Tortoise about a sale of the Observer, the world’s oldest Sunday newspaper, but the proposed takeover has prompted strong opposition from the title’s staff, who have threatened to strike, as well as from prominent media and culture figures.
James Harding, founder of Tortoise, has met with senior Observer staff to try to reassure them about his plans.
He has promised £25mn of investment in the Observer over five years above existing operating costs, with proposals to combine the newspaper with the existing Tortoise operations to create a print and digital media group. About 70 Observer staff would be transferred to the enlarged group as part of the deal.
Lubner’s proposed investment in Tortoise will be made by This Day, his philanthropic foundation and impact investment fund.
Another person close to the talks said Lubner saw the investment as a chance to support quality journalism in the UK.
In response to a request for comment, a spokesperson for This Day confirmed the talks with Tortoise Media.
“This Day has committed to invest, as a minority investor, in the Tortoise holding company, as part of Tortoise’s wider growth and operational strategy,” they said. “This investment is not dependent on the Observer transaction.”
Lubner, 64, was born in South Africa to Jewish refugees from Russia, and has been a fierce anti-apartheid campaigner.
He has been funding Labour since meeting chancellor Rachel Reeves in 2021.
In an interview with the Financial Times in June, he described Brexit as “the biggest own goal ever” and opposed the previous Conservative government’s immigration policy.
He has also given money to UK youth employment projects and has helped women win seats in parliament.
Lubner, who has not invested in Tortoise previously, will join a range of existing backers in supporting the Observer deal, with the start-up having already lined up funding from investors including Patrick Healy, chief executive of Hellman & Friedman, the US buyout firm.
Additional reporting by George Parker
