Network 18 Media & Investments Ltd’s venture capital arm Capital18 Fincap has entered into an agreement with Carnival Films Private Limited to divest its stake in Stargaze Entertainment Private Limited. Stargaze operates multiplexes in emerging urban centres of India under the brand name of 'Glitz Cinemas'.
Capital18 is a majority shareholder (75%) at Stargaze and the transaction, expected to be completed within the current financial year, will result in a profitable exit for Capital18.
With this, Carnival Cinemas continues its aggressive expansion in the cinema exhibition space. The company has, by way of acquisitions, ramped up its screen count from 40 in the beginning of 2014 to 300 by the end of the calendar year. The acquisition of Stargaze’s business means that the group’s screen count is now close to 340 screens, making it a tough competitor to Inox, which has 361 screens as of date.
Shrikant Bhasi, chairman of the Carnival Group had earlier told Business Standard that the intention is to take the screen count to 400 by the end of the current fiscal.
There is another acquisition lined up over the next couple of months which is expected to add another 40 odd screens to its total. In the meantime, Carnival’s organic expansion will focus on smaller cities and towns, typically those with populations between 100,000 and 1,000,000.
The Big Cinemas deal size was Rs 700 crore and the two regional acquisition deals will cost Carnival another Rs 150 crore. In July, the group acquired the movie exhibition business of HDIL (Broadway Cinemas; 10 screens) for Rs 110 crore. Carnival’s total investment in inorganic expansion thus far has been Rs 960 crore.
While part of this investment has been infused by the promoters, another part is through debt. The group is also bringing on board a private equity fund based in Singapore to raise 15-18% of the total investment.
