Doughty doubles its money in 2.5 years on Vue

The £935m sale of the cinema chain means the UK firm has now returned €2bn to LPs in the last 12 months, as it prepares to return to market with its next fund.

London-headquartered Doughty Hanson has sold cinema group Vue Entertainment to Canadian investors OMERS Private Equity and Alberta Investment Management Corporation (AIMCo) for £935 million. 

Doughty Hanson has more than doubled its investment in Vue, according to a statement. The firm acquired the business for £450 million in December 2010, via Doughty Hanson & Co. V, a €3 billion 2007 vintage. 

During Doughty’s investment period, Vue has grown to become one of the largest cinema groups in the world. It has doubled the number of cinemas under its ownership from 70 to 146 and the number of screens from 678 to 1,321. 

Additionally, Vue has made three add-on acquisitions during Doughty’s ownership. It acquired Apollo Cinemas in the UK in May 2012, and CinemaxX, Germany’s second largest operator, in July 2012. Last month, it agreed to buy Multikino, the second largest operator in Poland. Doughty has also supported Vue in rolling out digital technology across the circuit and opening new cinemas at shopping malls Westfield London and Westfield Stratford City. 

It had been a “successful and exciting” investment, Julian Huxtable, a partner at Doughty Hanson, said in a statement. Vue offered “a strong platform for growth” and enabled Doughty “to return significant cash to investors”.

Doughty has
sold  Vue to
OMERS PE

The sale is Doughty’s second realisation from Doughty Hanson & Co. V, which has already returned 52 percent of commitments to investors, with an additional six investments still to exit. 

Prior to Vue Entertainment, Doughty sold Norit, a producer of activated carbon which is used in the purification of water and air, in two parts: in May 2011, Norit’s Clean Process Technologies division was sold to a trader buyer for €503 million, and then a year later, Doughty sold Norit’s Activated Carbon division for $1.1 billion. The total return on the investment was 2.5x, representing a total distribution of €836.8 million and an IRR of 23 percent, according to Doughty’s annual review 2012. 

The realisation of Vue is Doughty’s fourth exit in the last twelve months. The total return to investors from these exits, which include the IPO of TUMI and HellermannTyton and the sale of Norit, was €2 billion, the firm said.

Doughty is currently raising its successor fund, Doughty Hanson VI, which has a €2 billion target, according to PEI’s Research and Analytics division. 

OMERS Private Equity, the direct investment arm of OMERS pension plan, tried to acquire Vue in December 2010, but lost out to Doughty, according to a source close to the matter. It is understood that OMERS has closely followed the company since then. There was no auction process to arrange the sale, the source said. The transaction is expected to close by the end of July. 

OMERS Private Equity and Alberta Investment Management Corporation will support the management team as they seek to capitalise on the significant organic growth opportunities across all its markets and combine this with selective acquisitions, the pair said in a separate statement. 

The acquisition of Vue is the fifth direct investment from OMERS Private Equity by the European team, which was established in 2009. Since then, it has invested over $1.3 billion. In 2011, OMERS Private Equity acquired ship management service business V.Group for $520 million. In 2009, it invested $700 million in specialist credit provider Haymarket Financial. In June 2012, OMERS Private Equity acquired Lifeways, a UK provider of supported living services for people with disabilities, for £207 million. Last month, it acquired IT software business Civica for £390 million from 3i Group.