L Capital to invest $19.5M in PVR, subsidiary

In its third deal in India, L Capital Asia has picked a 10 per cent stake in Ajay Bijli-promoted PVR Ltd for Rs 57.7 crore through a preferential issue. L Capital will also invest Rs 50 crore in the multiplex chain's subsidiary PVR Leisure Limited, which is involved businesses like mall entertainment and gaming.

For L Capital Asia, a private equity firm backed by $29 billion global luxury conglomerate LVMH group, this will be its first investment outside apparel business in India and first private investment in public equities (PIPE). It had earlier invested in Genesis Luxury and Fabindia.

The deal includes L Capital, through L Capital Eco, picking up 2.88 million shares in PVR Ltd at Rs 200 per unit. The shares of PVR went up 19 per cent on the news of the deal and ended up 11 per cent at Rs 185.4 on Wednesday.

At the current market capitalisation of Rs 480 crore, PVR is valued at 8 times FY12 EBITDA (earnings before interest, taxes, depreciation, and amortization).

PVR Ltd also announced its Q1FY13 results on Wednesday, with consolidated total income up 50 per cent to Rs 176 crore with it turning a profit of Rs 7.6 crore against a loss of Rs 13.2 crore in the same period last fiscal.

According to an ICICI Securities report, PVR plans to roll out 14 properties with 82 screens in FY13. PVR is expected to roll out 10 properties in FY13 and five in FY14 to take the tally to 53 properties with 230 screens by FY14.

In FY12, the company reported a 12 per cent increase in net sales to Rs 513.1 crore with net profit up over three times Rs 25.4 crore as compared to the previous year.

PVR Leisure

PVR Leisure Limited, which is getting Rs 50 crore from L Capital, will expand its business in mall entertainment, gaming, food and leisure formats. Its investment in PVR bluO Entertainment Limited will also be held through PVR Leisure Limited. PVR bluO, which operates two bowling centres, is a 51:49 joint venture between PVR and Major Cineplex Group of Thailand.

The bowling business recorded growth of 40.2 per cent in FY12 to Rs 19.9 crore and the management has a capex of Rs 150 crore for the business in FY13. PVR plans to add four more bowling centres in FY13, two each in Pune and Bangalore, according to ICICI Securities report dated May 2012.

PE Interest in PVR

PVR, which expanded from single screen theatre in New Delhi to one of the first multiplex chains in India, has earlier seen interest from private equity investor. ICICI Venture had invested in the company in 2003 and exited in 2007, making nearly 5x its investment.

ICICI Venture again bought into the company in 2008 and currently holds a 7.79 per cent stake. Major Cineplex, which picked a stake in 2009, now holds 9.85 per cent stake, making it the largest shareholder after Bijli-led promoter group.

Last year, it bought the stake of ICICI Venture and JPMorgan in its film production and distribution subsidiary PVR Pictures Ltd, as the focus turned towards cinema exhibition business instead of production.

(Edited by Prem Udayabhanu)

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