Brown Shipley profits from Home Entertainment

Shares in Home Entertainment Corporation, the UK’s second largest video rental business, rose 14 per cent on their first day of trading on AIM.

The company’s venture capital investor, The Brown Shipley Development Fund, has sold its 31.46 per cent stake in the company, reaping a GBP14.2 million profit on an initial investment of GBP2.2 million.

Brokers Teather & Greenwood placed 6,976,712 shares or around 38 per cent of the company’s equity, raising approximately GBP11.9 million for the VC and Home Entertainment’s management. The shares exceeded the 170 pence offer price, rising to a high of 193.5 pence and giving Home Entertainment a market capitalisation of GBP34.09 million. Institutional buyers are reported to include ABN AMRO Asset Management, Schroder Investment Management and the British Steel Pension Fund. The company will also be granting share options to key employees.

The Brown Shipley Development Capital Fund, managed by Albemarle Private Equity, first invested in Home Entertainment in 1988 and made subsequent commitments in 1989 and 1990. The investment is the last to be realised from the 1987 fund, which has more than doubled the GBP24 million invested, returning GBP54 million to its investors. The gross IRR for the

portfolio is 24 per cent. David Wills, managing director of Albermarle, said: “We are extremely pleased. This has been a very successful investment for us.”

Home Entertainment was established in 1985 and has a ten-year record of sales and profits growth, strong cash flow and no debt. It now employs 1,600 staff in four divisions. Choices Video is a chain of 174 stores (planning to increase to 250 stores) renting videos, DVDs and computer games. Video Box Office enables convenience stores to offer video rentals. Choices Direct sells videos and DVDs by mail order, phone and Internet. The final division, Mosaic Entertainment invests in and acquires the rights to films and TV programmes. Group turnover for the year to June 2, 2001 was GBP83.4 million, with profits before tax of GBP4.9 million.

Also listing successfully on AIM this month was AsSeenonScreen, a company selling items (clothing, accessories and memorabilia) from films, TV or as seen on celebrities.

The company was founded in June 2000 and raised GBP1.2 million from Highland Fund Advisors. A million shares priced at 20p rose 17.5 per cent, raising GBP225,000 and giving the company a market capitalisation of GBP14.48 million. Seymour Pierce advised on the placing.