Dubai’s Abraaj invests in cinema chain Cinepax

KARACHI: Dubai-based private equity firm Abraaj Group on Wednesday said it had invested in Cinepax, Pakistan’s biggest cinema chain, to drive growth in the next four years.

“Our investment into Cinepax demonstrates our faith in the opportunity that Pakistan’s young growing population and expanding middle class represents,” Omar Lodhi, partner for Asia at The Abraaj Group said in the statement. “As one of the most active investors in Pakistan, with a strong on-the-ground presence, we see a long-term market opportunity in the cinema operator and video streaming business.”  The Abraaj Group didn’t disclose the invested amount in the local cinema operation.  It, however, said in a statement that it would support Cinepax in establishing international standard multiplex cinemas in new and upcoming locales.  Abraaj planned to help Cinepax develop 80 new screens across multiple locations over the next four years and also grow other entertainment related ventures.

Cinepax was established in 2006 and it has set 29 screens in 12 locations around the country since.  A statement said Abraaj will support the company in establishing international standard multiplex cinemas in new and upcoming locales.

“Pakistan’s entertainment industry has significant growth potential, underpinned by strong demographic drivers, positive changes in regulatory frameworks, and a growing number of malls that can support cinema multiplexes,’ it added. “In addition, the current low ratio of cinema screens (0.5 per million-population) and the opportunity to revitalize the local film industry represent a compelling investment rationale.” The Abraaj Group has been present in Pakistan since 2004. The Fund has a profitable track record in Middle East and North African region.  In July, the Fund unveiled a plan to divest its majority shareholdings from the country’s integrated power utility K-Electric at an estimated $1.7 billion.  The entry into Pakistan’s entertainment industry is Abraaj’s 9th investment in the country across a number of sectors, including healthcare, power distribution, renewable energy and industrials. Analysts said the group is selling its investment in Pakistan after realising 14 percent returns on investment a year in the power sector. 

“Any investment in the entertainment industry would earn it three times of the current return,” Nabeel Khursheed, an analyst at Topline Securities said.  Khursheed, who covers consumer sector shares, said there is an immense untapped growth potential in the sector, which enjoyed double digit growth in the last four years.  “Disposable income is increasing,” he added. 

There are only three cinema operators, Cinepax, Atrium and Nueplex working in the country with the current low ratio of cinema screens standing at 0.5 per million population.  They introduced new cinema technology only a decade ago in the country where traditional cinemas lacked sedentary comforts and attractive ambiance.