PVR LtdBSE 0.56 %, the country’s largest film exhibition company, is set to invest $4 million to pick up a minority stake in American luxury restaurant-and-theatre company iPic -Gold Class Entertainment, a company insider said.
iPic owns and operates 16 luxury theatres with 121 screens across 10 states in the US and as part of its future plans, sees potential for at least 200 such premium formats. The company is also in the process of listing its shares on US stock exchanges.
iPic has offered to appoint Ajay Bijli, chairman at PVR, on its board post completion of the investment and post listing, the company said in a listing.
PVR is viewing this as an R&D investment and believes that some of the relevant learning from this unique investment opportunity can be replicated in context of Indian market.
“PVR would benefit by getting insights into the luxury model which is more experiential than vanilla movie going formats, which can be replicated in some of the luxury offerings of PVR,” a senior company executive told ET.
PVR’s board of directors on Thursday approved the proposed investment to pick up 2.16% stake in iPic, the person said. Completion of the deal is subject to receipt of relevant corporate and regulatory approvals.
Key shareholders in iPic include Australia’s largest exhibitor company Village Roadshow, which was also PVR’s partner in its early days (PVR was started as Priya Village Roadshow).
Other stakeholders include a large State pension fund (Retirement System of Alabama) and the largest American exhibition chain Regal Cinemas, which recently invested $12 million in iPic.
PVR’s average revenue per customer from F&B is currently 40% of ticket price. The company hopes to improve that ratio over a period of time by understanding iPic’s F&B strategy, which can have significant impact on the profitability of the company.
iPic’s average revenue per customer on food and beverage from in-theatre dining is approximately two times of other cinema operators in the US. The average revenue per customer from F&B is also more than the average ticket price of the cinema.
For 2016, the company’s revenue mix included 51% from food-and-beverage 31% from theatre box-office and 18% from other revenue streams such as membership and sponsorship.
A seat for Bijli on the board of iPic will allow PVR to have a firsthand update on evolving situation with respect to the theatrical window in the US market. This will give the firm a perspective on how International studios are planning on windows, alternate platforms and also film hire issues.
“Since there is no conflict of interest that iPic and PVR have for the respective markets where they operate, we can share learnings on various capex spends including seat manufacturers, carpets, architects, designers, technicians and technology equipment suppliers, which could significantly reduce capex spends for PVR’s own luxury offerings in India,” said the PVR executive quoted earlier. “This valuable information will help PVR to make better cinemas at competitive costs and with up to date technology.”
