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Inflexion Private Equity, the mid-market private equity investor, announces today that it has sold its stake in the UK cinema operation Ster Century (UK) Ltd (“Ster”). In less than 12 months Inflexion has made a return of over three times on it original £6 million investment and an IRR of 250%.
The business is being sold to the management team and financial backers for £32m. The transaction is part of the considerable corporate activity in the cinema industry as larger operators grow by acquiring market share.
This transaction generates proceeds for Inflexion’s investors of c£19m against an original cost of less than £6m. It has the effect of increasing Inflexion plc’s NAV by £3.5m or 7.5%.
Simon Turner, Joint Managing Partner of Inflexion Private Equity, said:
“This is a classic Inflexion mid-market transaction: the consolidation that we anticipated at the time of our investment has materialised and we have sold into the upward pressure on quality cinema asset prices making an excellent return on our investment in a very short time frame. Ster is a great company that is exceptionally well managed and we wish the company every success for the future.”
John Hartz, Joint Managing Partner of Inflexion Private Equity, added:
“We are delighted to be already announcing our first exit from our buy-out fund, within a year of making the investment. Inflexion specialises in buying businesses such as Ster, at good prices and where there are clear operational gains to be made during our ownership and which can be exited into a market consolidation. The Ster investment was no exception – revenues have grown strongly, margins have been increased on the back of improved operational controls and so it has generated us a lot of cash very quickly. We are happy to be selling into the consolidating UK cinema market, as originally envisaged.”
Inflexion originally backed the MBO of Ster in July 2003.