Anil Ambani’s Reliance Group to sell Big Cinemas to Carnival Films

Reliance MediaWorks Ltd (RMW), an arm of Anil Ambani-led business conglomerate Reliance Group, has signed definitive agreement to sell its multiplex business to South India-based hospitality-to-realty major Carnival Films Pvt. Ltd, as part of efforts to exit minority investments and bring down its overall debt, as per a statement.

The financial details of the transaction have not been disclosed, but the deal is said to be the largest ever deal in this space.

The deal will help Reliance Group reduce its overall debt by around Rs 700 crore, through a combination of transfer of debt of RMW and infusion of cash proceeds, Reliance Capital said in the statement.

Reliance Capital is the parent firm of Reliance MediaWorks, which operates one of the largest cinema chains, under the brand 'BIG Cinemas' with over 250 screens across India.

Carnival Films operates cinema chains under the brand ‘Carnival Cinemas’ with over 50 operational screens while 75 screens are to come on stream in two months taking the total portfolio to 125 screens. With the acquisition Carnival Cinemas will emerge as the third-largest multiplex operator and reach 400 plus screens by this fiscal, the statement said.

“We are targeting to achieve 1,000 screens by 2017 and look forward to the continued support of Reliance Group in our future growth,” Shrikant Bhasi, chairman, Carnival Group, said in the statement.

“Carnival Cinemas will not only make its presence in Tier I but would lay emphasis for strong presence across tier II & III cities. We want to make Cinemas synonymous to Carnival” added Bhasi.

The deal, however, does not include real estate owned by RMW at IMAX Wadala and other properties, which are intended to be separately monetised for around Rs 200 crore.

Moreover, Reliance Capital - the financial services arm of Reliance Group - will have the option to acquire a pre IPO minority stake in Carnival Cinemas at an appropriate discount, upon eventual listing of Carnival, the statement said.

"We are delighted to begin a long term relationship with the rapidly growing Carnival Group, through the sale of the multiplexes business of Reliance MediaWorks to them. We look forward to supporting the Group in their future growth initiatives in India and overseas,” Sam Ghosh, CEO, Reliance Capital Ltd, said.

Carnival Cinemas is currently present in Kerala, Karnataka, Tamil Nadu, Maharashtra, Madhya Pradesh, Uttar Prardesh and West Bengal.

The proposed transaction is subject to statutory and other approvals and is expected to be closed within the current financial year.

EY is deal advisor to Reliance Group, while KPMG is acting as deal advisor to Carnival Group.

The industry had seen a phase of consolidation with PVR acquiring Cinemax a couple of years ago. Earlier Inox Leisure had acquired Fame and was also in talks to acquire Essel Group-owned Fun Cinemas. The talks eventually did not materialise.

(Edited by Joby Puthuparampil Johnson)

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