Blue Voyage Partners Exit AFM Cinemas - Grandstanding Traction

A Turkish Private Equity Web Log

In an effort to cover the Turkish Private Equity Industry - for the promotion of Entrepreneurship, the private equity asset-investment model, and the communication thereof.

Blue Voyage Partners Exit AFM Cinemas

04 November 2007

As posted in the TDN (Velios buys AFM’s 51.9 percent shares), it appears AIG Blue Voyage achieves an exit from one of their longtime investments after just re-entering Turkey. I'm a bit short of time as of late, so here are the main points from the article:

Turkish cinema company AFM sold more than 50 percent of its shares to the Velios Ltd., a subsidiary of Russian Alfa Group Consortium Tuesday evening. The estimated price of the shares is to be around $28.5 million, however, the final price will be set after closing.

This led the previous owners of the company, Akdemir family and AIG Blue Voyage Fund L.P., to sell all their shares except for the 10 percent belonging to Ahmet Adnan Akdemir, AFM founder.

A statement made to the Istanbul Stock Exchange (IMKB) said that 51.9 percent of AFM shares (owned by AIG Blue Voyage Fund L.P., Yalçın Selgur, Mehmet Berent Akdemir, M. Sedat Akdemir, Fatma Füsun Akdemir, Ahmet Adnan Akdemir and Yusuf Agah Tansev) were sold to Velios Ltd. for $28.5 million.

AFM's market value

"The market value of the company is around $59 million but for the deal we calculated it to be $55 million. $28.5 million is not the final price, it may change after closing agreements," CEO Akdemir said yesterday.

Ahmet Adnan Akdemir remained a shareholder of the company with 10 percent. "I am also going to remain in his position as the CEO of AFM Sinemacılık for at least two more years," he added.

The deal also included an optional arrangement providing that Ahmet Adnan Akdemir's remaining shares will not be able to purchased within a year but later they will also be open to a sales agreement between two parties.

Alfa Group is a Russian consortium that is operating on many different business areas, including financial services, oil and gas production, technology, retail trade, telecommunications and media. The consortium is known in Turkey for its investment on Turkish GSM operator Turkcell. As of April 2007, the group together with its telecommunications subsidiary Altimo holds 27 percent of Turkcell shares.

AFM is Turkey's nationwide largest cinema circuit with 183 screens around the country and the first and only entertainment company listed in İMKB since October 2004. Close to 38 percent of the company shares are offered publicly and 90 percent of these publicly offered shares are owned by foreign firms such as Morgan Stanley.

AFM is expected to continually expand, especially with this new Russian partner, and a burgeoning shopping center boom in Turkey. I find it interesting (and a coincidence?) that just my last post was regarding the AIG Blue Voyage Fund (AIG Rehires and Re-Enters Turkish Buyout Market with Blue Voyage Advisors). It can only be speculated that the rehires and Blue Voyage's resurgence back in Turkey may have been tipped off by the momentum of this deal.

AIG originally bought a minority holding into AFM for an estimated $7 million in 2000. Again, we can only speculate on their rate of return (if any) on this deal, since there are others involved in the exit.

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