Satyam Cineplexes plans to raise `100 crore

Mumbai: Movie exhibitor Satyam Cineplexes Ltd plans to raise ₹ 100 crore by selling a minority stake to private equity investors and use the proceeds to fund expansion plans, managing director Deven Chachra said.

add_main_imageThe Delhi-based company has mandated BMR Advisors to find buyers for the stake, he said.

Satyam had earlier tried to find a strategic partner, according to two persons with knowledge of the matter, neither of whom wanted to be named.NextMAds

The movie exhibition business in India has seen a wave of consolidation in recent years, with PVR Ltd in November agreeing to acquire a 70% stake in Cinemax India Ltd to become the country’s largest theatre chain operator, with 351 screens. It overtook Inox Leisure Ltd, which acquired Fame India in 2010 and has 279 screens.

“In the current multiplex environment of consolidation it is difficult for smaller cinema chains to survive. Satyam was in talks with leading multiplex owners such as Inox and PVR, but valuation was an issue,” said an industry expert and one of the persons cited above.

Satyam operates around 40 screens in cities such as Delhi, Jodhpur, Aurangabad, Rohtak, Indore and Mysore. It plans to add 79 more screens in Bangalore, Bhopal, Dehradun, Lucknow, Amritsar and other cities.

“Satyam’s promoter was expecting a valuation of around ₹ 250 crore which is unviable for 40 screens,” said an executive at one of the multiplex chains Satyam was in talks with and the second of the two persons cited above.

According to the 2013 media and entertainment report by the Federation of Indian Chambers of Commerce and Industry (Ficci) lobby group and consultancy KPMG, almost 97 screens shut down in India in 2012.

“The quest for scale in the exhibition business will continue to drive deals as players race to add screens. In the short run, organic growth will be limited by the bottlenecks created due to slowing development of malls and commercial real estate,” the report said.sixthMAds

Strategic investors had shown interest in the company, Chachra said.

“However, as of now our focus is on building our chain and increasing footprint,” he said. The promoters have complete control of the theatre chain.

Financial institution IFCI Ltd is a regional investor in Satyam, having bought securities convertible into equity in 2009.

“IFCI’s investment still has not been converted into equity as it was attached to certain benchmarks we have to achieve,” said Chachra.