Inflexion Private Equity, the UK-based mid-market buyout firm, has completed the first investment from Inflexion Private Equity Fund 2, which held a first close on E50m last week.
The firm has acquired Ster Century (UK), an operator of cinemas in the UK and Ireland, in a deal valued at approximately £25m (E35m). Inflexion is providing around one third of the funding as equity, with the remainder provided by HSBC as debt.
Ster owns and operates seven multiplex cinemas located in retail and leisure centres at six sites around the UK and one in the Republic of Ireland. Ster currently owns 87 screens with its most recent cinema opening in April 2003 in Cardiff’s Millennium Plaza.
John Hartz, Charles Thompson and Amanda Luckett co-ordinated the transaction for Inflexion Private Equity, with Hartz and Thompson taking seats on the Ster board. Ster will be chaired by Jonathan Scherer, with Stephen Louis also joining the Board as a non-executive. Scherer and Louis have worked with management since late 2001 and originally introduced the transaction to Inflexion in early 2002.
“This latest investment draws upon a long track record of buyout transactions by the Inflexion team,” said John Hartz, managing partner of Inflexion Private Equity. “Against a growing market background, we are looking forward to maturing the chain, before a likely trade sale in the consolidating UK cinema market, in due course.”
The UK cinema market has been the subject of considerable interest from private equity buyers in 2003, the result of the steady cashflows produced by cinemas and a significant increase in audience figures in recent times. Cinema admissions in the UK are at their highest for almost 30 years, according to a report by the Film Council. Last year, the amount of cash spent on cinema tickets totalled £755m – an increase during the last decade of 175 per cent. In total, more than 176m cinema tickets were bought in 2002.
The year’s biggest deal in the sector came in March when WestLB acquired the Odeon chain of cinemas from UK private equity group Cinven in a deal worth £430m. Odeon is the largest chain in the UK, with more than 130 sites across the country.
In May, Legal & General Ventures (LGV) and US-based Boston Ventures agreed to pay around £225m for the UK operations of the Warner Village Cinema Group, which was merged with portfolio company SBC International Cinemas.