DNEG/Prime Focus to IPO
October 22, 2019
By Chris Forrester
Double Negative (DNEG), the London-based visual film and TV special effects business which includes Prime Focus, is to mount an IPO which will end up with a listing on the London Stock Exchange.
However, the company has a clouded past and is currently subject to HM Revenue & Customs (HMRC) allegations that it could owe more than £10 million (€11.6m) in unpaid tax and associated penalties.
DNEG is looking to raise a reported £600 million in its Initial Public Offering.
Prime Focus is an Oscar and Bafta award-winning special effects house with a praiseworthy roster of high-profile Hollywood movies and TV work. It has some 6900 staff with operations in London, India, Canada and the US.
DNEG is currently controlled by Mumbai-based Prime Focus and managed by Namit Malhotra. Currently the Malhotra family own 26 per cent of Prime Focus, and Prime Focus owns 90 per cent of Double Negative.
Back in October 2015 Prime Focus’s London offices were raided by HMRC and a number of employees arrested. DNEG admits that the outstanding sum claimed by HMRC would be between £2.5 million – £8 million. HMRC could impose a fine of a similar sum. Prime Focus India says it would indemnify the London businesses.
The DNEG Registration Documents, issued October 15th, in addition to the usual ‘boilerplate’ risk notices says: “To date, the criminal investigation by HMRC has been limited to the individuals in question and HMRC has not made any direct allegations against the Group itself or Prime Focus Limited or against their respective officers or managers. In August 2019, the Group’s and Prime Focus Limited’s respective specialist counsel each confirmed with HMRC that HMRC does not currently consider the Group or Prime Focus Limited (or any of their respective subsidiaries) to be a suspect in their investigation.”
Prime Focus India was also directly involved with the leaking of a Game of Thrones episode in 2017. Four people, including 3 members of staff were arrested.
The DNEG Registration Document of October 15th admits that “The Group has and may in the future experience security breaches and cyber threats” and “The Group regularly encounters attempts to intrude or gain unauthorised access to its network, content or infrastructure”.
In the new IPO DNEG is looking to sell £150 million of new shares with a valuation of £600 million. Last year saw revenues rise to £302 million (from £270m).
Rupert Gavin, a former head of BBC Worldwide, is the new company’s Chairman.