Shares in Prime Focus gained as much as 6.5 on Wednesday on reports that Reliance Capital will buy a “significant minority stake” in the company for anywhere between Rs 350 crore to Rs 400 crore. Including today’s gain, the stock has appreciated 18 per cent in the last two days.
According to reports, Prime Focus may use this money to fund its acquisition of Britain’s second-largest film studio Double Negative, which was announced last week.
Avinnash Gorakssakar, head (research) miintdirect.com told NDTV that there are lots of reports that Prime Focus’ management will sell out or a foreign strategic investors will come in. If the news about investment by Reliance Capital is true, it’s a big positive for the stock, he added.
“Prime Focus has large external commercial borrowing (ECB) debt on its balance sheet and Reliance Capital could help reduce the debt… The stock has good potential to go up,” said Mr Gorakssakar.
Reliance Capital had exited Prime Focus following its public offer in 2006.