Mumbai: Carnival Cinemas Ltd, the third largest multiplex operator in India, is in early talks with Edelweiss Alternative Asset Advisors Ltd to raise about Rs400-460 crore through a structured debt transaction, according to two people with knowledge of the matter.

The money will be used to refinance some of Carnival’s existing loans and expansion into new markets, one of the two people said on condition of anonymity.

Carnival started in 2010 with three screens in Kerala.

Serial acquisitions have pushed Carnival to the third position among multiplex operators with about 341 screens, behind only PVR Ltd (516) and Inox Leisure Ltd (420).

Shrikant Bhasi, founder and chairman of the Carnival Cinemas, declined to comment. An email sent to the Edelweiss spokesperson on Tuesday did not elicit any response.

In one of the largest buyouts in the multiplex business, Carnival acquired Big Cinemas, a division of Anil Ambani’s Reliance MediaWorks Ltd, for around Rs700 crore in December 2014.

Carnival, which bought 252 screens of Big Cinemas, had added 30 screens with the acquisition of HDIL Broadway for Rs110 crore in January 2014. In 2015, Carnival made its third acquisition by buying out Stargaze Entertainment Pvt. Ltd from a unit of Mukesh Ambani-controlled Network18 Media and Investments Ltd for an undisclosed amount, giving it 30 additional screens.

“The company had drawn up aggressive plans to add more screens and also refurbish the existing ones. The company plans to acquire prime real estate across markets to improve occupancy and boost revenues," said the second person cited above.

Carnival will invest Rs500 crore for setting up about 200 screens in Madhya Pradesh, Business Standard had reported last year, citing Bhasi.

Besides the multiplex buyouts, Carnival Group has made a clutch of acquisitions in real estate. In September 2015, Carnival acquired the commercial real estate projects of Larsen and Toubro Ltd (L&T) in Chandigarh, including Elante Mall, Hyatt Hotel and office premises for Rs1,785 crore.

Carnival Group also bought Leela Infopark at Technopark in Thiruvananthapuram for Rs142 crore last year.

In a similar deal, Carnival Group had taken over the IT infrastructure of Leela Group in Kochi in July 2014 for Rs280 crore.

Structured debt transactions have become common in India, with a number of domestic and foreign institutions and private equity firms disbursing debt finance.

Groups such as GMR Holdings Pvt. Ltd, Avantha Group and Apollo Hospitals Enterprise Ltd have raised debt from US-based KKR & Co. Other funds which are active in the space include Aion Capital Partners, an India-focused fund established by an affiliate of Apollo Global Management LLC, together with ICICI Venture Funds Management Co. Ltd. Last year, Aion invested Rs600 crore in Varun Beverages Ltd, a bottling and distribution franchisee of PepsiCo India Holdings Pvt. Ltd through a structured deal.

Edelweiss Alternative Asset Advisors is in the process of closing its second fund, EW Special Opportunities Fund II.

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