CPPIB, PGGM, CDC and Multiples PE investing $55M in multiplex operator PVR

Multiples Alternate Asset Management (Multiples PE) along with Canadian and Dutch pensions funds and UK's CDC have signed an agreement with the country's largest multiplex chain operator PVR Ltd to invest Rs 350 crore ($54.8 million), according to a stock market disclosure.

As per the agreement, Multiples PE will subscribe to 4.47 lakh shares of PVR at Rs 700 each aggregating to Rs 31.3 crore; an investment entity majority owned by Canada Pension Plan Investment Board (CPPIB) with minority stake held by Dutch pension fund manager PGGM will subscribe to 4.33 lakh shares worth Rs 30.3 crore and an entity counting CPPIP, PGGM and CDC will pick 41.19 lakh shares worth Rs 288.38 crore through a preferential allotment. Post acquisition, it will hold around 19.6 per cent stake in the company. PVR runs operations under the PVR Cinemas banner.

The investment will help PVR finance back its acquisition of cinema exhibition business of realtor DLF Ltd for Rs 500 crore which it announced early this week.

As a result of the proposed acquisition, PVR will have a presence in 44 cities with 115 multiplexes and 506 screens stretching its lead over Inox and Carnival Cinemas in the multiplex business. Currently, PVR has 467 screens across 105 locations in 43 cities.

This is the second time Multiples PE is investing in PVR to back an acquisition. It had originally invested Rs 153 crore in 2012 to pick 15.8 per cent in PVR. It had co-invested with an existing PE investor L Capital, which put in Rs 82.3 crore, to back PVR’s acquisition of Cinemax.

That deal pitchforked PVR as the clear leader in the multiplex business in terms of number of screens.

Interestingly, Multiples PE has decided to back the firm again after having sold around one-third of its holding in it last year.

Last year, Multiples PE had part exited the company by selling over 5.6 per cent stake. The PE firm had divested stake in tranches and sold a total of 1.8 per cent in PVR. It is estimated to have almost tripled its investment value in the part-exit.

It is now picking new shares at almost three times the value it invested in 2012. It would own 9.34 per stake in the company post the preferential allotment.

For CPPIB this marks a further investment push into India. The pension fund giant that has assets under management of C$264 billion ($213 billion) as of March 31, 2015, had picked 80 per cent in a real estate platform in November 2013 partnering Shapoorji Pallonji Group , with an initial equity commitment of $200 million. This JV is to acquire foreign direct investment (FDI)-compliant, stabilised office buildings in major metropolitan areas in India. This JV recently struck its debut deal with the acquisition of an IT park in Chennai at an enterprise value of $220 million (Rs 1,340 crore).

CPPIB followed it up by joining hands with diversified business conglomerate Piramal Enterprises Ltd in February 2014 to offer rupee debt financing to residential projects in major urban centres of India. The two partners committed an initial investment of $250 million each for the same.

In May last year Uday Kotak, promoter group of Kotak Mahindra Bank Ltd, sold 3.24 per cent stake in the private lender for Rs 2,200 crore ($372 million) to CPPPIB to reduce his holding in the firm. RBI had previously asked the bank to cut promoter holding as part of regulatory norms that restrict single ownership of a private lender in the country.

Last December CPPIB invested Rs 1,000 crore (around $157 million) in L&T Infrastructure Development Projects Ltd (L&T IDPL), a unit of Larsen and Toubro Ltd (L&T), by way of subscription to compulsorily convertible preference shares.

For PGGM, this would be the the first known India related investments while CDC has been investing in India both as a direct investors besides being a Limited Partner or investor in Indian PE firms.

PVR's share price rose marginally to close at Rs 650 each, up 0.12 per cent on BSE in a flat Mumbai market on Friday.

Multiples, which had raised its maiden $405 million fund in 2011, is raising its second fund. Former ICICI Venture CEO Renuka Ramnath-led private equity firm is also looking to float a new housing finance company with commitment from its new fund.

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