The Irish Times Ltd has invested in Gazette Group Newspapers, which publishes three weekly papers in west Dublin. Initially The Irish Times will take a 43.8 per cent stake, but has the option to acquire full control.

The purchase price has not been disclosed, but The Irish Times's initial investment is in the region of €2.5 million and includes funding for further expansion of the three-year-old group.

Relevance Publishing, which trades as Gazette Group, is trading profitably but has accumulated losses of €1,088,733 associated with its start-up, according to the accounts for the year to the end of February 2006.

Set up by Liam Hayes, the founder of Ireland on Sunday, and Michael McGovern, a former advertising executive, the company publishes three weekly paid-for titles: the Lucan Gazette, the Blanch Gazette,and the Clondalkin Gazette.

Along with group editor Kevin MacDermot, Mr Hayes and Mr McGovern will continue to hold a shareholding. Mr Hayes is managing director. Mary Lean, a 2 per cent shareholder, will increase her shareholding to 10 per cent. Ms Lean was a co-founder and original investor in Aircoach.

Another group of founding investors, led by businessman Peter Quinn and publisher Martin O'Muilleoir, will exit.

Under the terms of the deal, The Irish Times can increase its stake to 53.8 per cent in three years' time and to 76 per cent in five years, with the option to buy out the balance after that. The existing management will continue to run the business, with The Irish Times having three seats on the eight-strong board.

Irish Times managing director Maeve Donovan said: "The Irish Times considers the Gazette newspaper group to be an important company which is addressing the needs of the large urban centres which have grown around our city over the last decade."