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Prime Focus to sell part of UK broadcast unit to PE-backed firm led by former exec

24 March, 2015

Mumbai-based visual entertainment services company Prime Focus Ltd has received its board approval to divest  its entire stake in its UK-based subsidiary Prime Focus London Plc to a new firm Blue 2.0 for £399,700 ($595,900), the company said in a stock market disclosure.

The sale includes the divestment of entire 21.5 million shares which is in line with the company’s strategy to monetise its non-core assets.

Prime Focus will retain its content services offering which provides services to long-standing clients like the BFI and the Imperial War Museum, and a number of large-scale contracts with others. These contracts will continue to be serviced by Prime Focus staff from the company’s facility at another location.

“The divestment of this business allows us to concentrate our efforts on our core creative services divisions (Prime Focus World and Double Negative) and our cloud technology business (Prime Focus Technologies) in addition to the broad spectrum of media services business in India,” Prime Focus managing director Ramki Sankaranarayanan said in the statement.

The two companies are expected to finalise the terms of the agreement shortly.

“Backed by a group of private equity investors, Blue 2.0 will offer broadcast clients a boutique post production offering with a focused approach and a personalised service. Blue 2.0 plans to be a major player in the broadcast post-production space and plans are underway to add more capacity and additional service offerings such as VFX to the existing post offering very soon,” Blue 2.0 managing director Parvinder Bhatia said.

The firm did not share further details on Blue 2.0 and an email query to gather information on the firm and its private equity backers did not elicit a response.

However, this appears to be a case at an intersection of a PE-backed management buy-out and management buy-in of the unit. Bhatia, who now leads the firm which is buying out the unit, is a former employee of Prime Focus. He was managing director of Prime Focus Broadcast VFX, UK for close to eight years starting January 2007. As per his LinkedIn profile, he quit the firm last August.

An engineer from Manipal University and an IIM Lucknow grad, Bhatia previously worked at consulting firm EY (formerly Ernst & Young) and had a short stint at media house Bennett, Coleman & Co Ltd.

The deal comes as Prime Focus is in the final stage of executing a larger deal where Anil Ambani-led Reliance MediaWorks (RMW) and its associated firms are coming as co-promoters along with Malhotras, the current promoters of Prime Focus.

The partners, who joined hands for a multi-tiered transaction last year, completed the open offer in January.

RMW, earlier known as Adlabs Films Ltd, which was acquired by Anil Ambani-led group from Manmohan Shetty a few years ago, announced a merger of part of its business with Prime Focus as part of the first leg of the transaction. A part of the fresh allotment of shares to RMW comes as a part of this deal.

Prime Focus, which is backed by Standard Chartered Private Equity, provides creative and technical services to the film, broadcast and advertising market. It provides pre-production to final delivery services like 2D-to-3D conversion, video and audio post-production and digital distribution, among others.

Shares of Prime Focus shot up 14.36 per cent to end at Rs 41.4 each on BSE in a flat Mumbai market on Tuesday.

Meanwhile, the company appointed Hemalatha Thiagarajan as additional, non-executive director.

(Edited by Joby Puthuparampil Johnson)


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Prime Focus to sell part of UK broadcast unit to PE-backed firm led by former exec

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