Amusement park operator Adlabs Entertainment is in talks to raise about Rs 650 crore from financial investors as part of a two-pronged transaction that will comprise a sale of fresh shares by the company and a partial exit by existing investor ICICI Ventures, people directly briefed on the matter said.
The Manmohan Shetty-promoted theme park operator is said to be in talks with at least three private equity firms, including Blackstone Group Warburg Pincus and TPG for the funds. It wasn’t immediately clear though whether the discussions had advanced with any of them. The funds are likely to be used to pare down the company’s debt levels and for expansion of its Imagica brand of amusement parks that generates over a million footfalls annually at one location on the Mumbai-Pune expressway but could expand to other locations eventually.
“Pursuant to our debt reduction initiatives, we have already signed separate term sheets to sell our hotel and surplus land,” Adlabs joint CEO Dhimant Bakshi told ET in response to queries pertaining to the fund-raising exercise.
“With reduced debt, we are seeing good interest from a mix of investors. We are open to capital infusion for the current business and for future expansion,” Bakshi said.
Adlabs has appointed the advisory arm of EY to arrange the share sale, people directly familiar with the matter said. Warburg declined to comment, while a mail sent to Blackstone remained unanswered. TPG could not be reached for comment. The fresh issue of shares could lead to a dilution in Shetty holding in the company. BCCL, the publisher of The Economic Times, also owns a 1.5% stake in the company, the filings revealed.
Adlabs had borrowings of Rs. 1000 crore, latest available data shows.
“The industry is in its nascent stages and growth is expected to be driven by favourable age demographics, growing spends on leisure and increasing urbanization”, CRISIL analyst Bhaskar Bukrediwala said in a research report on amusement parks released in March last year.
Imagica has the potential to double footfalls in the next four years, Adlabs conveyed in an investor presentation in November.
It currently operates a water park, an all-weather theme park and a snow park. It has entered into an agreement to sell the Novotel hotel located at the 132 acre theme park to D-Mart founder Radhakishan Damani for Rs 212 crore.
It is also divesting 204 acres of additional land that the company owns around the theme park site.
Adlabs clocked revenues of about Rs 240 crore for the year to March 2017. It reported operating profit margins of 25%.
Rival Wonderla Holidays, which operates amusement parks in Bengaluru, Kochi and Hyderabad reported similar revenues and margins for the financial year 2016-17 but was relatively debt-free.
