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Bijli, Ramnath make blockbuster money in PVR stake sale to Warburg

Global private equity firm Warburg Pincus has picked up 14% stake in Ajay Bijli-promoted PVR Ltd.

The Rs 820 crore transaction, industry experts said, saw affiliates of existing PE investor Multiples – promoted by Renuka Ramnath – and current promoters receive handsome returns for parting with a portion of their shareholding.

However for Warburg, it’s an extremely expensive transaction that doesn’t even offer any control to the incoming investor, experts said.

“Price premium on this deal is significant for a financial participation structure. This deal does not give PVR, as an organisation, fresh capital to grow and deliver significant market leader position. At an industry level too, it does not create capacity for a starved sector,” said Suniil Punjabi, investment banking – entertainment media at advisory firm TRUST.

Following the deal, Multiples and PVR promoter group will hold 14% and a little over 20%, respectively while Warburg will hold 14% stake.

PVR operates 562 screens in 122 properties in 48 cities in India.

Ajay Bijli, chairman and managing director, PVR Ltd, said, “The Indian multiplex industry is at a cusp of rapid transformation and at the next level of growth driven by consumer demand and experience, convenience and technology. With Warburg Pincus as an investor, we continue to accelerate our long-term development and expansion.” Warburg’s global network and experience will help in growing the company, he said.

Vishal Mahadevia, managing director and co-head, Warburg Pincus India, said, “The Indian film and entertainment market is expanding rapidly and we look forward to supporting Ajay and the entire management team during the next phase of growth.”

A long-term investor in PVR, Multiples continues to hold a significant stake in the company.

“Having invested in PVR when it was a 12 screen cinema house in 2003, it has been an exhilarating journey with an outstanding entrepreneur,” said Renuka Ramnath, founder and managing director, Multiples Alternate Asset Management, adding that the PE firm will remain invested and partner the company management as they navigate to a higher orbit of performance and scale.