UFO Moviez India Ltd, the world's leading satellite networked digital cinema chain, is up for sale. According to people in the know, two private equity investors that hold the majority stake in UFO and the promoters have appointed an investment bank to seek buyers for the company.
The US-based Providence Equity Partners holds 35.7 per cent and the UK-based 3i Group holds 26.5 per cent in UFO Moviez. Tyre maker Apollo International Limited holds an 8.7 per cent stake in the company. According to bankers, the deal size could be Rs 800-1,200 crore.
Founded in 2005 by Sanjay Gaikwad and Narendra Hete of the Valuable Group, UFO Moviez 3352 screens in India and has released nearly 1,500 movies in 2013. It is first firm in India to enable digital delivery of movies, which in turn has played a major role in the revival of the cinema exhibition business in India. At a time when physical prints were getting too cumbersome to transport and were increasingly subject to piracy, UFO Moviez provided a faster and more secure mode of transport for cinema prints.
In January 2007, UFO Moviez raised $22.37 million (Rs 100 crore) from 3i Group against a 32.5 per cent stake. Later in April 2011, Providence Equity Partners, via its investment arm P5 Asia Investment Holdings (Mauritius), invested $58 million (Rs 260 crore) for a 35.7 per cent stake. The investment was a combination of fresh compulsory convertible preference shares and secondary purchase of shares from the promoters and investors. P5 Asia Investment bought about 1.5 million preference shares at a price of Rs 100 each and 3.5 million equity shares from Apollo International Ltd, 3i Group and the promoters. 3i Group sold 6 per cent stake for Rs 45 crore.
A 3i spokesperson said, "We do not comment on speculation surrounding our portfolio companies." Kapil Agarwal, joint managing director, UFO Moviez, and executives of with Provident Equity Partners did not respond to queries from Business Standard.
Industry estimates peg UFO's market share at nearly 70 per cent with some regional players taking up the remaining share. Other players like Prime Focus also provide these services as a part of their other businesses.
In a country that is grossly under-screened, UFO Moviez is a key player in enabling expansion of the theatrical exhibition of cinema in India, believe industry experts. The scope to scale up is tremendous, considering India has under 10,000 screens, with a majority concentrated in the south and west. With digital delivery services such as the ones UFO provides, exhibitors could hope to expand to smaller towns, they said.
