3i Pumps $34M Into Ministry

Britain’s academic institutions aren’t the only reason thousands of American college students flock to London each semester. It seems they can hear the beat of the British nightlife across the Atlantic Ocean.

Apparently, international venture capital firm 3i Group PLC is also feeling the groove, to the tune of the $34.2 million it recently pumped into Ministry of Sound, one of London’s most famous nightclubs.

Established in 1991, the club, based in London’s South end, accounts for only 3% of the company’s total revenue, and most of that is based on reputation alone. Ministry of Sound’s logo, a crowned disco ball, is widely recognized in the UK, and can be found in grocery stores, on news stands, and even on DJ spin tables all over Britain.

The remaining 97% of the company’s revenue is derived from its Web site and magazine, both of which are profitable. Those assets, along with its popular compilation CDs, make the company the fastest-growing dance music brand in the UK, according to Daniel Adler, an investment manager of media with 3i.

“Clubbing has moved on from the rave scene with its acid/house music,” Adler said. “Dance is tied more into pop music. And that is the genre Ministry of Sound would like to be the leader in.” As such, the company intends to use the proceeds from the round in order to help it achieve that leadership position. Ministry of Sound has no immediate plans to secure future venture capital funding.

Worth slightly in excess of 120 million pounds ($172.8 million U.S.), according to Adler, Ministry of Sound is expected to continue to be a dominant influence in the British club culture and, as such, was an attractive investment for 3i, which touts itself as one of the foremost media investors in Europe.

The VC firm took close to a 20% stake in the company, Adler said.