The Anil Ambani-led Reliance Group has sold its Big Cinemas unit to South India-based Carnival Group in a deal that would lower the debt of its financial services arm Reliance Capital by about Rs 700 crore. The biggest ever deal in the multiplex sector, which entails sale of Big Cinemas business by Reliance Capital unit Reliance MediaWorks, would exclude IMAX Wadala multiplex's real estate assets in Mumbai and some other properties that the group plans to sell separately for about Rs 200 crore.
The Carnival transaction will reduce Reliance Capital's leverage by approximately Rs 700 crore, through a combination of transfer of debt of Reliance MediaWorks and infusion of cash proceeds, the two companies said in a joint statement. The firms did not disclose the exact value of the deal.
Reliance Capital CEO Sam Ghosh said the deal is in furtherance of its "stated objective of focusing purely on its core financial services businesses, significantly reducing exposure to non-core investments in the media and entertainment sector, and reducing overall debt." The deal will make Carnival the third largest multiplex operator with nationwide presence and over 300 screens. Other major players in this business include PVR and INOX. The deal has been struck between Carnival Cinemas and Reliance MediaWorks.
Reliance Capital, the financial services arm of the Anil Ambani-led business conglomerate, will retain an option to acquire a stake in pre-IPO stage "at an appropriate discount" whenever Carnival goes for a listing. It is the parent firm of Reliance MediaWorks, which operates one of the largest cinema chains, under the brand 'BIG Cinemas' with over 250 screens pan-India. Carnival Group chairman Shrikant Bhasi said they are targeting to achieve "1,000 screens by the year 2017".
The proposed transaction is subject to necessary statutory and other approvals and is expected to be closed within the current financial year. Reliance Capital had recently announced plans to focus on core business and is in the process of encashing its minority investments. It also recently exited from day to day operations of its global film and media services business, by merging its global film and media services business with Prime Focus.
The deal created the world's largest media services power house, with an order pipeline of Rs 2,000 crore, over 5,500 employees and operations in the US, UK, Canada, China and Singapore,
besides India. Reliance MediaWorks and Prime Focus promoters infused fresh equity capital of Rs 120 crore each into Prime Focus. Reliance Cap is also in talks with 2-3 international investors to sell its 16% stake in leading travel portal Yatra.Com for an estimated Rs 500 crore.