BackSingapore PE fund to set up JV with PVR
Capital Eco Ltd in pact to invest Rs107.8 crore, set up JV with Indian operator of movie multiplexes
Premium(Priyanka Parashar/Mint)
Singapore-based private equity fund L Capital Eco Ltd, a subsidiary of L Capital Asia Llc, said on Wednesday that it had signed agreements to invest a combined ₹ 107.8 crore in PVR Ltd and to set up a joint venture with the Indian operator of movie multiplexes.
L Capital Eco will invest ₹ 57.7 crore under the preferential allotment route in PVR for a 10% fully diluted stake. It will subscribe to 2,885,000 equity shares in PVR at ₹ 200 apiece—a premium of around 8.7% over the closing stock price of ₹ 184.1 on the National Stock Exchange of India Ltd on Wednesday.
The fund will invest ₹ 50.1 crore to set up a joint venture with PVR, PVR Leisure Ltd, which will focus on in-mall entertainment, gaming, food and leisure. L Capital’s holding in the venture will be 44%, with PVR taking 51% and the remaining going towards management stock options.
PVR’s existing investment in the bowling-alley business PVR BluO Entertainment Ltd, a joint venture established in 2009 with Thailand-based Major Cineplex, will now be held through this new company.
“This partnership will help us to build and expand our core cinema exhibition business and expand our in-mall entertainment portfolio," said Ajay Bijli, chairman and managing director of PVR. “We are evaluating different entertainment and leisure formats under the new entity apart from growing the bowling business."
The company is targeting business worth ₹ 100-150 crore over the next 12-24 months through the newly formed venture.
“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," said Sanjay Gujral, regional managing director at L Capital Asia, Singapore.
“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, F&B (food and beverage) and gaming businesses. So we want to work with PVR in establishing these formats," he added.
L Capital Asia has in the past invested in ethnic apparel company Fabindia and luxury retailer Genesis Luxury Fashion. This will be its third investment in the Indian market.
“Entertainment forms like gaming are very new concepts in India, plus it’s an expensive form of entertainment and will see a lot of demand in the urban markets," said Ashish Pherwani, a partner at consultancy Ernst and Young. “Out-of-home spends on entertainment are largely recession proof, so it’s a good business to be in."
On Wednesday, PVR reported a net profit of ₹ 7.81 crore in the three months ended 30 June, a 56.2% jump over the year-ago period, on a 51% increase in revenue to ₹ 177.36 crore.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
