Venture capital firm Accel Partners has invested Rs 100 crore ($18 million) to buy a large minority stake in Big Tree Entertainment Pvt Ltd, which runs movie and event ticketing website BookMyShow, through a mix of primary share issue and sale of shares by existing investor Network18 Media & Investments.
Prior to the latest transaction, public-listed Network18 Media & Investments (through its step-down subsidiaries) held 60 per cent stake in Big Tree, which has now shrunk to 40 per cent. Network18 said the part-exit would add Rs 45 crore to its pre-tax profit. Earlier, Mint reported that Accel Partners bought a minority stake from Network18 for Rs 66 crore ($12 million) and added there was an undisclosed amount of investment in separate primary issue of shares.
The deal values BookMyShow at over Rs 250 crore. For more detailed report on valuations, click here.
BookMyShow competes with the likes of KyaZoonga, but is much larger in size. It draws more than 7 million visitors who book over 2 million tickets a month. Besides movie/play tickets, the company is an exclusive ticketing partner of several sporting franchises in India including Formula 1, Indian Premier League (5 of the 9 franchises), Aircel Chennai Open, Super Fight League, Yonex Badminton Championships, etc. The company has also expanded its footprint in global markets like Malaysia and New Zealand.
Ashish Hemrajani, founder & CEO of BookMyShow.com, said, "The funding from Accel comes at an interesting inflection point in our journey and is a strong vindication of our efforts to create India's largest online entertainment ticketing platform. We look forward to leveraging Accel's global Internet experience and Network18's continued support to expand our footprint and help take our customer experience to the next level."
The capital raised will be utilised by BookMyShow to strengthen its presence in tier II and tier III cities via non-movie ticket sales and event-booking business. It will further tap single-screen cinemas in small towns and build technologies around mobile payments and applications.
The funding came from both Indian and the global VC funds of the firm. US-headquartered Accel Partners, which counts among its successes names such as Facebook, operates a separate India-focused VC fund with a corpus of $155 million. The India fund, raised last year, typically invests smaller sums in early-stage deals of sub-$5 million ticket size.
Prashanth Prakash, partner at Accel India, said, "BookMyShow.com caught our attention because it has become synonymous with online entertainment and ticketing. We are constantly striving to invest in businesses that assume a leadership position by driving the definition and growth of their respective categories."
Sameer Gandhi, partner at Accel US, commented, "The Internet is playing a crucial role in bringing goods and services to the masses in India and will produce the next generation of Indian consumer franchises. BookMyShow.com has demonstrated exemplary execution in creating a large online community, and in our view, has the potential to become the pre-eminent entertainment destination for India."
With this latest investment, Accel brings another large consumer Internet company to its portfolio. Accel's Indian portfolio includes Flipkart, the largest consumer e-commerce firm in the country, besides a bunch of other players. It has been one of the more prolific early-stage VC investors in India and cut around 8 deals in 2011. In 2012, it has already struck around nine transactions (including Big tree) and more than half of these deals are related to e-commerce.
Going by the size of the latest transaction, Accel has clearly shown how it is trying to scale up the investment ticket value by co-investing with the global fund, which can write bigger cheques.
Avendus Capital was the sole financial advisor to the Accel-BookMyShow transaction.
For Network18, the stake sale in Bookmyshow.com is the second in a series of asset monetisation transactions. Earlier this year, it had profitably sold its stake in NetworkPlay, one of the Capital18 investee companies, to Bertelsmann. The Network18 group operates a portfolio of digital content and e-commerce assets including Moneycontrol.com, Ibnlive.com, In.com, Firstpost.com and HomeShop18.com. Network18 also holds a minority stake in Yatra, one of the top OTAs in the country, which recently raised its series D round of funding.
Network18 had 60 per cent stake in BookMyShow way back in March 2007. This was through a fresh issue of shares and purchase of shares by founders of the firm for Rs 14.5 crore ($3.21 million back then). This valued BookMyShow at Rs 24.1 crore, which means Network18 would have struck a multi-bagger in the latest transaction.
The 2007 deal also included a clause that Network18 would bring in Rs 5 crore to be paid to Big Tree for the partly paid-up shares if Big Tree's current account bank balance fell below Rs 1 crore. Of this, Network18 had brought in Rs 3.65 crore as of March 31, 2011.
Further, as per the business purchase agreement, the promoters of Big Tree had the option to ask Network18 to buy 5 per cent stake at the end of every year (for three years) for Rs 3.75 crore each. However, this option was not exercised.
(Edited by Sanghamitra Mandal)