Bridgepoint sells Nordic Cinema Group in SEK 8.25bn trade sale

The transaction sees Bridgepoint Europe V – the GP's 2014-vintage €4bn fund – exit its shareholding less than two years after acquiring NCG in a secondary buyout, netting an IRR of 68%, a source close to the deal told unquote". NCG marks the first realisation from Bridgepoint Europe V – which is still investing – leaving nine companies in the fund's portfolio, according to unquote" data.

Alongside the private equity firm, Swedish media group and minority shareholder Bonnier also sold its stake to AMC. Following the sale, NCG will retain its Stockholm headquarters but will technically operate as a subsidiary of British cinema chain Odeon Cinemas Group – which itself was acquired by AMC from private equity houses Terra Firma and AlpInvest in a £921m acquisition in July 2016.

During Bridgepoint's investment period, the cinema operator's EBITDA increased by 50%, the same source said in an email. The same source claimed NCG had grown to be the Nordic region's largest cinema group, taking in 42% of all box office revenues in the region.

Expected to conclude in H1 2017 pending European regulatory approval, Bridgepoint's divestment marks the end of six years under private equity ownership for NCG.

According to a statement by Bridgepoint, AMC's acquisition is supported by a Citi-arranged debt package, with long-term financing expected to be a mix of term loans, bonds and AMC primary equity. The New York Stock Exchange-listed corporate is targeting near-term leverage of around 4.7x adjusted EBITDA and is expecting annual cost synergies of around $5m.

Previous funding
The GP acquired a controlling stake in NCG from listed Swedish PE firm Ratos in April 2015, in an SBO that gave the group an enterprise value of SEK 4.7bn. The deal saw existing part-owner Bonnier partially exit its holding while retaining a minority stake in NCG.

At the time, Ratos said it would receive approximately SEK 1.7bn from the sale of its 58% stake, equivalent to a profit of SEK 900m and an IRR of 42%.

Ratos first entered the ownership structure of what would eventually become NCG in March 2011, when it acquired a stake in Finnish cinema chain Finnkino. The GP acquired a majority stake from Helsinki-based media company Sanoma, in a deal with an EV of €94.3m – excluding lease liabilities of €21.6m.

Company
Headquartered in Stockholm, NCG is an operator of cinemas in the Nordic and Baltic regions.

It operates 68 cinemas across Denmark, Sweden, Norway, Finland, Estonia, Latvia and Lithuania, and owns substantial minority interests of around 50% in 50 associated cinemas in the Nordic countries.

NCG's brands include SF Bio, SF Kino, Finnkino and Forum Cinemas – among others. According to Bridgepoint, the group generated revenues of SEK 2.94bn in 2015 and SEK 3.16bn in the 12 months to 30 September 2016, with operating margins in the Nordic theatres exceeding AMC's.

People
Bridgepoint – Mika Herold (director).
Nordic Cinema Group – Jan Bernhardsson (CEO).

Advisers
Vendor – Nomura (M&A); KPMG (financial due diligence, tax); White & Case (legal); Mannheimer Swartling (legal).
Equity – Citi (corporate finance); Pinsent Masons (legal); Husch Blackwell (legal); Weil Gotshal & Manges (legal); Lindahl (legal).

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