Citi Venture to invest $100 mn in Pyramid Saimira

MUMBAI: Leading private equity investor Citigroup Venture Capital is in talks with Pyramid Saimira Theatre (PSTL) to invest about $100 million in the company. The money is being raised to implement the company’s film production plans as well as set up new theatres. PSTL is looking at producing 100 films annually.

However, company officials said that the deal was almost through, and it is currently awaiting shareholder approval for the same. The investment would be made by way of preferential allotment. PSTL managing director P Saminathan declined to comment on an query emailed to him.

Pyramid Saimira Theatre, a leading movie theatre chain in the country, operates in the southern states of Tamil Nadu, Andhra Pradesh, Karnataka and Kerala. It has also begun operations in Malaysia, becoming the first Indian company to have international presence in the film exhibition segment.

The company has recently introduced the innovative biometric card strategy in their theatrical business to win customer loyalty.

It has recently completed a $90 million foreign currency convertible bond at a conversion price of Rs 454 per share, listed on the Singapore Stock Exchange. The company is present in Malaysia through its joint venture Company called Pyramid Saimira Theatre Chain Malaysia Sdn Bhd.

The company’s PAT for June quarter for the financial year 2007-08 has gone up by 174.3% quarter on quarter (QoQ) to Rs 16 crore.

Earlier this year, the company floated a film content fund to help production houses create and finance content. Vision Media Group (VMG), a London based media and entertainment group invested Rs 100 crore into the fund. The fund has plans to raise $500 million by the end of the current fiscal.

With one leg in the film production business as well as control over exhibition, Pyramid Saimira’s business model eliminates the traditional middleman - the distributor. By virtue of its control over hundreds of screens, the company hopes to simultaneously showcase a film in multiple locations, which, to some extent, cuts piracy.

The company has also signed a memorandum of understanding with Infinity Film Completion, a division of venture capital firm Infinity India Advisors, which offers film guarantee and project completion services, including term loans for film projects.

The idea is to ensure that films are completed on time and within the budget, thereby eliminating some of the risks in the business of film-making. Indian film industry is expected to reach Rs 13,000 crore by 2009.

Pyramid Saimira intends to invest Rs 600 crore this year partly in film production and also in refurbishing theatres. It will also arrange for about Rs 250 crore of institutional funding for production. The move essentially comes on the back of securing the supply side for PSTL, analysts point out.

With PSTL, being part or full producer of the films, the company will have exclusive rights to the release of the films. This would make it privy to the first level of exploitation, before it is distributed to other players. It can also ensure a steady flow of content.