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L Capital exits PVR for $76M, nets over three-fold returns

24 July, 2015

L Capital, a private equity firm backed by global luxury conglomerate LVMH group, has exited its three-year-old investment in PVR Ltd, the country’s largest multiplex chain operator, completing the second exit from India and a full exit from its exposure to the media exhibition and entertainment group.

It sold its entire 15 per cent stake on Friday for Rs 485 crore ($76 million) through an open market transaction. The shares were picked by a clutch of institutional investors including mutual funds, insurance firms and foreign portfolio investors, stock exchange data showed.

Early this year, it had sold its entire stake in PVR Leisure, a mall entertainment and gaming arena arm of PVR, to the media exhibition firm for an undisclosed amount. PVR Leisure houses mall entertainment, gaming arena, food courts and other leisure entertainment formats. PVR’s investment in PVR bluO Entertainment Ltd is also through PVR Leisure. PVR bluO, which operates bowling centres, is a 51:49 joint venture between PVR and Major Cineplex Group of Thailand. PVR Leisure is being merged with PVR.

Although the exact returns clocked by L Capital in the previous deal could not be ascertained, it has made a neat profit from the listed parent. It has made 3.5 times the total investment in PVR Ltd, not counting dividend earnings.

The PE firm had originally invested Rs 107.7 crore (just under $20 million then) in PVR as a group: PVR Ltd (Rs 57.7 crore) and PVR Leisure (Rs 50 crore) through a preferential issue in 2012.

This was its first investment outside the apparel business in India and first private investment in public equities (PIPE) deal. It had earlier invested in Genesis Luxury and Fabindia in the country. The PE firm had not made any fresh investments in the country since 2012, as per VCCEdge, the data research platform of VCCircle.

Later in the same year, it invested Rs 82.3 crore more in the listed parent PVR. It had co-invested with Multiples PE which was roped in when PVR acquired Cinemax.

Multiples PE, which had made a partial exit from PVR last year, has put in fresh money into the firm. In a preferential allotment completed this week, it invested Rs 31.3 crore more.

It co-invested as part of a larger deal where PVR raised Rs 350 crore. Bulk of the money (Rs 288.38 crore) came from an investment entity which counts Canada Pension Plan Investment Board (CPPIB), Dutch pension fund manager PGGM and UK’s CDC as shareholders. Another entity, majority owned by CPPIB, put in Rs 30.3 crore.

PVR competes with the likes of Inox, Carnival-owned Big Cinemas and Cinepolis. The sector has seen a string of M&As in the recent past as top players sought to expand business through a ready to operate business. Indeed PVR too acquired DT Cinemas to strengthen its numero uno position in terms of number of screens and revenues.

PVR scrip declined 6.29 per cent to end at Rs 803.35 a share in a weak Mumbai market on Friday.

ICICI Securities acted as a selling broker for L Capital in the sale.


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L Capital exits PVR for $76M, nets over three-fold returns

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