Global private equity firm Providence Equity Partners has pumped $58.38m (Rs2.6bn) into Indian digital cinema company UFO Moviez for an undisclosed minority stake.

India’s leading e-cinema integrator, UFO is backed by two local investors – Valuable Group and Apollo International – and in 2007 attracted $22m of equity financing from 3i Group. All three retain stakes in the company, although Providence is now the largest shareholder.  

Providence has previously invested in Indian phone companies Idea Cellular and Aditya Birla Telecom. However, the deal with UFO marks its first investment in the Indian cinema business.

“Providence is delighted to partner with UFO Moviez, which is an innovative player in the film distribution and exhibition space in India,” said Biswajit Subramanian, managing director, Providence Equity Advisors India.

“This is an exciting opportunity as the company has pioneered a highly cost effective satellite based High Definition Digital Cinema system for delivering movies and other live content and is making a significant impact in the industry. UFO’s technology and business model are ideally suited for India and other emerging markets. Providence looks forward to a close partnership with the Company and to contributing to its further growth.”

UFO Moviez joint managing director Kapil Agarwal said: “We are very excited to initiate our partnership with Providence Equity Partners and look forward to driving the company to its next phase of growth, where we will continue to provide better and more cost effective business solutions for the entertainment industry.”

Launched in 2005, UFO is an end-to-end e-cinema provider which beams movies via satellite to its network of 2,500 screens. The company has also been eyeing international expansion and hopes to introduce its low-cost business model to markets such as China and Indonesia.

A report in the Wall Street Journal said that the company is also acquiring a strategic stake in Scrabble Entertainment, India’s leading integrator of DCI-compliant digital screens.