ICICI picks up equity in PVR cinemas

Thursday, 27 March 2003, 08:00 Hrs
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NEW DELHI: ICICI Venture has picked up 380 million equity in PVR Limited that operates a chain of cinema multiplexes in the Indian capital.

PVR Limited announced Wednesday a 1 billion expansion plan involving the development of 50 cinema complexes countrywide. The largest of these will be an 11-screen multiplex in Bangalore as also a seven-screen multiplex in Gurgaon on the outskirts of Delhi.

"We have invested 380 million as part of the funding to support the 1 billion expansion plan of PVR Limited," said Sumit Chandwani, who heads the private equity investments division of ICICI Venture, at a press conference Wednesday.

"The balance 620 million will be raised through debt funding of 400 million and the rest in accruals," added PVR Limited managing director Ajjay Bijli.

Chandwani was, however, not willing to disclose the percentage of stake picked up in PVR Limited.

Bijli maintained the majority stake remained with PVR Limited while ICICI Venture had picked up a "significant portion".

Questioned about what had prompted the deal, Chandwani contended PVR cinemas had created "magic" in Delhi and that "cinema along with cricket is family entertainment throughout India".

He also held that cinema exhibition carried lesser risks than film production.

"Cinema exhibition carries the least risks. It is not risky as production and cash flows are stable," Chandwani felt.

Asked whether ICICI Venture had an exit plan from the tie-up, Chandwani replied: "There is no roadmap for that".

According to ICICI Venture managing director and CEO Renuka Ramnath, "the entertainment industry is one of the focus sectors for our India Advantage Fund. The cinema industry is in the midst of a transformation and this creates an opportunity for strong players to consolidate.

"Given its depth of experience, the strength of its management team and its brand equity, PVR is best placed to extract maximum benefit from the multiplex revolution and emerge as the leading national chain of cinemas," she stated.

PVR CEO Gerald V. Dibbayawan described the tie-up as a "landmark achievement in the field of cinema.

"We have a roll-out plan for Mumbai which is our key market area and we want to make a big splash there. We have identified five sites including Juhu, Goregaon and Phoenix Mills that will have five to 10-screen multiplexes," he said.
Source: IANS
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