Warburg Pincus' Stake Purchase Dragged PVR into the Blues

Dynamic Equities | June 15, 2017, midnight


Intraday on Thursday, PVR share price has landed in the soup after surging as much as 5.05 per cent yesterday.


Private equity (PE) firm Warburg Pincus bought a 14 per cent stake in PVR Ltd for Rs 820 crore through an open market transaction. Warburg Pincus bought the stake from existing investor Multiples Alternate Asset Management, which sold a 9 per cent stake, and the promoters of PVR which includes Chairman and managing director Ajay Bijli. The sale values the company is approximately Rs 5,860 crore.


Shareholders


Post the above mentioned transaction, Renuka Ramnath-owned Multiples, will retain 14 per cent in PVR through its units. The company’s promoters will stay the largest shareholders with a shareholding of about 20 per cent, as per the Warburg statement said. The promoters of PVR held 25.25 per cent in the company as on 31st December.


Stock analysis


As the markets commenced on Thursday, PVR share price is trading with a marginal fall of 0.77 per cent at Rs. 1293.85. The stock opened at Rs. 1304.00 against its previous closing at Rs. 1303.90. The multiplex chain has a market cap of Rs 6,046 crore.


PVR is one of the top 500 performing stocks for this quarter as identified by Dynamic Levels.


Investments made in the stock


Multiples PE had invested around Rs 153 crore in 2012 to buy a 15.8 per cent stake in PVR.  During February 2016, it invested more along with existing investors to pick an additional 2 Per cent stake. Canada Pension Plan Investment Board, Dutch pension fund manager PGGM and CDC are among the other investors in the multiplex chain.


The Managing director and co-head of Warburg Pincus India Pvt. Ltd, Vishal Mahadevia informed that the PE firm is going to support the PVR management during the multiplex operator’s next phase of growth. As of now, PVR currently operates 562 screens across 122 properties in 48 cities in India. PVR is delighted to welcome Warburg Pincus as an investor as they continue to boost their long-term development and expansion.


Sneak peek into the multiplex sector


The Indian multiplex industry is at a cusp of rapid transformation and the next level of growth is pushed by consumer demand and experience, convenience and technology.


Box office revenue in India is seen at an estimated $1.64 billion in 2015 and is anticipated to rise to $2.74 billion in 2020, growing at an average annual rate of 10.9 per cent.


The multiplex sector continues to grow at a robust pace, hence, generating private equity investor interest. The growth will continue with the growth in tier 1 and tier 2 cities on the back of successful and growing movie launches.


In terms of multiplexes, India remains underserved. At the end of 2014, there were around 11,200 screens in the country as a whole—a small number considering the population and the appetite for cinema, the report said.


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