Renuka Ramnath is backing Ajay Bijli again as his company, the multiplex chain operator PVR Ltd, makes its next transformative move.

Ramnath’s Multiples Alternate Asset Management, existing investor L Capital and the PVR promoters are together putting in Rs 260 crore to fund the acquisition of Cinemax India Ltd. The deal will make PVR the largest multiplex chain operator in the country, with 351 screens across 85 locations and a total capacity of 84,190 seats, pipping Inox-Fame combine and Big Cinemas.

PVR has said today that it will acquire the promoters’ 69 per cent stake in Cinemax for Rs 395 crore ($71 million) and will also make an open offer for 26 per cent stake, which may cost the firm another Rs 148 crore (More on the deal here).

As of October 2012, PVR had a debt of Rs 200 crore, with a debt/equity ratio of 0.6x.

Multiples is investing Rs 153 crore while L Capital, which has acquired 10 per cent stake in PVR in September this year, is putting in another Rs 82.3 crore. The promoters, Ajay and Sanjeev Kumar Bijli, will invest another Rs 25 crore. After the dilution, Multiples and L Capital will hold 15.8 per cent each in PVR while promoters’ stake will come down to 32 per cent from the previous 40 per cent.

The shares in this allotment will be placed at Rs 245 a unit. PVR scrip closed at Rs 252.15, up 6.41 per cent on the BSE on Thursday, giving the company a market capitalisation of Rs 727 crore. L Capital had made its earlier infusion in PVR at Rs 200 per share.

PVR was established in 1988 and formed a joint venture with Australia-based Village Roadshow in 1997 to set up multiplexes across the country. When Village Roadshow pulled out of the JV In 2002, Ramnath had taken a call to invest in the firm as the head of ICICI Venture. Ramnath left ICICI Venture in 2009 to set up Multiples.

After the investment by ICICI Venture, Delhi-based PVR expanded nationwide to become one of the key multiplex chains in India. ICICI Venture exited the firm in 2007, making nearly 5x its investment.

“We are delighted to partner with PVR at this stage, as the company catapults into a new orbit. Given my longstanding relationship with Ajay Bijli and PVR, and our deep understanding of the space, Multiples is able to move quickly and support the company. This is a perfect example of how private equity partnerships can transcend across different stages in the lifecycle of a company,” said Ramnath in a statement.


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