Prime Focus raises Rs 313 crore from Macquarie Capital

The investment in Prime Focus World values creative services division at Rs 1,770 cr. Also announces operations in China

Prime Focus World, the creative services division of Prime Focus Limited, has secured investment of Rs 313 cr from Macquarie Capital, the capital raising and principal investing arm of Macquarie Group, valuing it at Rs 1,770 crore.

The investment will be deployed in two phases - Rs 224 crore committed in the first phase signed today and Rs 89 crore in a second transactional phase, both of which are designated for strategic growth. The capital raised will be used to build global creative services platform, near-term strategic acquisitions and deleveraging debt in the parent company, Prime Focus Limited (PFL).

In addition to the funding from Macquarie, Prime Focus World had secured $10 million from China’s AID Partners in March. Parent company PFL had got $70 million from Standard Chartered Private Equity earlier.

Namit Malhotra, founder and CEO, Prime Focus World, N V and founder of Prime Focus Limited said, "After having made an initial investment of $43 million in 2008 to build out our global platform, we have transitioned and become a business where today our shareholders are seeing a seven times increase in value, while most companies have found it hard to keep pace with the changing times. The investments validate our global ambition to become a world leader while continuing to create greater value for our shareholders.”

Prime Focus also recently announced launch of its operations in China. The China office is expected to be operational in the third quarter of the year and will be based in Beijing.

Prime Focus’ presence in the neighbouring country will be through the joint venture between Prime Focus Limited, AID Partners Capital and Chinese entity Zhejiang Jingqi Wenhua Chuanbo Company Limited.

The company has revealed that it will be investing close to $3 million in the Chinese market in the near future. The Beijing operations will offer services like visual effects and 2D-to-stereo 3D conversion and will also explore hybrid cloud technology-enabled asset and workflow management solutions for broadcast industry.

According to the Chinese State Administration of Radio, Film and Television, China's 2012 box office receipts increased 30%, in majority part due to imported films, ranking China as the world's second-largest box office next to the US (surpassing Japan). People’s Republic of China (PRC) is also the largest 3D market outside of the United States, encouraging the government to relax import restrictions that now allow an additional 14 foreign films to be distributed in China provided they are in 3D or large format.

According to Ramki Sankaranarayanan, CEO of Prime Focus India and president and CEO of Prime Focus Technologies, China was the logical choice for global expansion on this count.

He said, “The proactive state policies in china have caused the budgets for tent pole movies to increase considerably and all factors considered, China is the growth story waiting to happen.”

The company’s China operations will house a sales and marketing outfit which will enable it to capitalise on the global talent pool that Prime Focus has developed through its offices in India, North America and Europe. The team will consist of local personnel and Indian leadership.

“Our experience has been that localisation coupled with global competency is a winning formula and in China too, we plan to take that route. China being a language sensitive market, we look forward to working with local talent and cater to the demand for quality VFX and 3D in the country,” Sankaranarayanan added.