Deal announcement - The Light Cinemas

News: Investment News | 1 January 2015

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We are pleased to announce the completion of a £5.2 million growth capital investment to back established cinema operator, The Light Cinemas.

  • Investment date: January 2015
  • Commitment size: £5.2m
  • Legal advisers to Connection Capital: Gateley
  • Corporate finance advisers to The Light Cinemas: Spectrum Corporate Finance

The commitment from Connection Capital clients, which is EIS eligible* (Enterprise Investment Scheme) is supported by £4.5m of funding from Santander which, through its Breakthrough programme, is committed to providing up to £200 million in growth capital to businesses in the UK. The investment has been used to acquire from Cineworld a successful, nine screen multiplex cinema in the centre of Cambridge. It will also be used to support the rollout of further sites across the UK - Bolton, Sheffield, Thetford, Dundee, Stockport and Walsall – all of which are secured under a signed agreement for lease.

The Light was founded in 2007 by John Sullivan and Keith Pullinger, highly experienced cinema executives who have been responsible for establishing successful cinema circuits around the globe. The Light offers a unique independent approach to the traditional commercial multiplex concept – with an over-arching focus on customer comfort, including excellent customer service, superior quality sound & vision and real value for money. Each cinema is proud to boast a separate identity and a mixed programme that reflects the personality and spirit of each community.

The Light currently operates cinemas in New Brighton, Wirral, Wisbech, Cambridgeshire and Halle in Germany. Following completion of the transaction, Simon Burke, formerly CEO of Virgin Entertainment Group and various high profile leisure and retail groups including Mitchells & Butlers and Hamleys, will assume the role of Non-Executive Chairman. Simon, a Connection Capital client, brings with him a wealth of experience which will be of value to The Light in the implementation of its future strategy.

We worked with The Light’s management team to structure the investment such that clients were able to benefit from the tax breaks afforded by the Enterprise Investment Scheme, which was established to encourage investment in small private companies.

  • 30% income tax relief on investments of up to £1 million in any tax year
  • any capital gain is tax free if the investment is held for more than 3 years
  • capital gains can be rolled over into EIS investments thereby deferring a CGT liability
  • loss relief (additional to the income tax relief already received) if the investment does not go to plan

With c.£170m under management, our other recent private equity transactions include a growth capital investment in Redeem Holdings, a global leader in ‘re-commerce’ (recycling and takeback management) of mobile phones and electronic products; the MBO of education software company, Impero International; and the MBO of Virgin Wines, the online wine retailer. Since the beginning of 2013 clients of Connection Capital have now provided more than £60m of equity across 19 investments. *Advanced clearance already received from HMRC.

“This transaction is a really good example of the Enterprise Investment Scheme encouraging investors to support SME growth in the UK. The ability of Connection Capital to raise £5.2million of capital from its clients further demonstrates the appetite they have for quality private equity opportunities.” - Claire Madden, Partner