L Capital backs Indian cinema operator PVR
L Capital, the private equity arm of luxury group LVMH, will invest just under INR1.1 billion ($19.4 million) in cinema and entertainment company PVR for a 10% stake. As part of the deal, L Capital will set up a joint venture with the Indian firm that will focus on in-mall entertainment, gaming, food and leisure.
According to a filing with the National Stock Exchange of India, the private equity unit's Singapore subsidiary, L Capital Eco, will subscribe to 2.88 million shares in PVR at INR200 apiece for a total consideration of INR577 million. This represents a premium of around 8.7% on the company's closing price Wednesday. The remaining INR501 million will be channeled into the joint venture, of which L Capital will own 44% to PVR's 51%. A further 5% is earmarked for management stock options.
The joint venture, which is subject to approval by India's Foreign Investment Promotion Board, will also control PVR's existing bowling-alley business, PVR BluO Entertainment, itself a joint venture established in 2009 with Thailand's Major Cineplex.
PVR currently operates 179 screens in cinemas across 24 cities in India. It plans on adding another 69 by the end of the current financial year and wants to reach 500 by 2014. Net profit fell 64.5% year-on-year to INR79.8 million for the quarter ended June 30, but this was largely due to a one-off inflation last year resulting from the sale and lease back of property in Mumbai. Operational income was up 51.6% to INR158.7 million as cinema revenue jumped 33%.
"Our focus is on targeting discretionary consumption as a broader theme in India and within that we look at select sectors where we can bring strategic value. Media and entertainment is clearly one of our focus sectors," Sanjay Gujral, L Capital's regional managing director, told LiveMint.
"As the market evolves, experience from other countries like Korea tells us that you can use the multiplex business as a centre of plate to build other entertainment, food and beverage, and gaming businesses. So we want to work with PVR in establishing these formats."
This is L Capital's third investment in India, following commitments to ethnical apparel brand Fabindia and retailer Genesis Luxury Fashion. The PE unit was also linked to trouble-hit Lilliput Kidswear, but pulled out of talks due to differences over valuation.
More on South Asia
Latest News
Asian GPs slow implementation of ESG policies - survey
Asia-based private equity firms are assigning more dedicated resources to environment, social, and governance (ESG) programmes, but policy changes have slowed in the past 12 months, in part due to concerns raised internally and by LPs, according to a...
Singapore fintech start-up LXA gets $10m seed round
New Enterprise Associates (NEA) has led a USD 10m seed round for Singapore’s LXA, a financial technology start-up launched by a former Asia senior executive at The Blackstone Group.
India's InCred announces $60m round, claims unicorn status
Indian non-bank lender InCred Financial Services said it has received INR 5bn (USD 60m) at a valuation of at least USD 1bn from unnamed investors including “a global private equity fund.”
Insight leads $50m round for Australia's Roller
Insight Partners has led a USD 50m round for Australia’s Roller, a venue management software provider specializing in family fun parks.