New Delhi: Private equity (PE) firm Warburg Pincus said in a statement that it has bought a 14% stake in PVR Ltd, India’s largest multiplex chain, for Rs820 crore through an open market transaction.
Warburg Pincus bought the stake from existing investor Multiples Alternate Asset Management, which sold a 9% stake, and the promoters of PVR, including chairman and managing director Ajay Bijli. The sale values the company at around Rs5,860 crore.
Following the transaction, Renuka Ramnath-owned Multiples will retain 14% in PVR through its units. The company’s promoters will remain the largest shareholders with a shareholding of about 20%, the Warburg statement said. The promoters of PVR held 25.25% in the company as on 31 December.
Shares of PVR surged 5.05% to Rs1,303.90 on BSE, outperforming the benchmark Sensex, which gained 0.08% to 27,257.64 points. The multiplex chain has a market cap of Rs6,046 crore.
Multiples PE had invested approximately Rs153 crore in 2012 to buy a 15.8% stake in PVR.
In February 2016, it invested more along with existing investors to pick an additional 2.6% stake. Canada Pension Plan Investment Board, Dutch pension fund manager PGGM and CDC are among the other investors in the multiplex chain.
“The Indian multiplex industry is at a cusp of rapid transformation and at the next level of growth driven by consumer demand and experience, convenience and technology,” said PVR’s Bijli. “We are delighted to welcome Warburg Pincus as an investor as we continue to accelerate our long-term development and expansion.”
Vishal Mahadevia, managing director and co-head of Warburg Pincus India Pvt. Ltd, said the PE firm will support the PVR management during the multiplex operator’s next phase of growth. PVR currently operates 562 screens across 122 properties in 48 cities in India.
Box office revenue in India stood at an estimated $1.64 billion in 2015 and will rise to $2.74 billion in 2020, growing at an average annual rate of 10.9%, according to a report by consulting firm PwC in June .
“The multiplex sector continues to grow at a robust pace and therefore generates private equity investor interest. The growth is expected to continue with the growth in tier 1 and tier 2 cities on the back of successful and growing movie launches,” said Raja Lahiri, a partner for transaction advisory services at Grant Thornton India Llp.
In terms of multiplexes, India remains underserved, said the PwC report. At the end of 2014, there were around 11,200 screens in the country as a whole—a small number given the population and the appetite for cinema, the report said.