Realisation of former BOSIF portfolio begins

Cavendish Square Partners, the Coller-backed owner of the former Bank of Scotland Integrated Finance private equity portfolio, has begun divesting its assets with the £450m sale of Vue Cinemas to London-based Doughty Hanson.

Cavendish Square Partners, the joint venture management company that bought the former private equity portfolio of Bank of Scotland Integrated Finance (BOSIF), has agreed to offload Vue Cinemas – one of its largest holdings – to Doughty Hanson. The deal values the cinema group at £450 million (€518 million; $729 million), a source with knowledge of the process confirmed.

Vue Cinemas: one of Cavendish's larger assets

Cavendish was created earlier this year with the backing of secondaries investor Coller Capital to acquire 40 private equity investments from Lloyds Banking Group in one of last year’s highest profile secondaries deals. The 40 investments – which include assets such as oil and gas contractor PSN and health and fitness chain David Lloyd – were inherited by the bank when it acquired Halifax Bank of Scotland.

Vue Cinemas has the third largest market share in the UK and operates 68 cinemas around the country.  Its portfolio includes the recently opened Vue Westfield cinema in London, which the group says has broken records as the highest grossing cinema in the country.

Cinema attendance has increased even against the backdrop of the economic downturn, according to a joint statement from Doughty Hanson and Vue. UK box office revenues were up 11 percent in 2009 and UK admissions were up 6 percent.  The increasing proliferation of 3D films is helping to drive growth and expected to represent around 30 percent of the box office next year.

Doughty reportedly beat a number of other private equity bidders to the asset, with BC Partners and Omers Private Equity in the running, according to a report in Monday’s Financial Times.