china

Chinese Private Equity Firm Launches a New Film Fund

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June 17, 2015

 

China’s film industry is currently booming and it looks like private equity firms are starting to get in on the action as well. China’s state-backed private equity firm, China Media Capital, announced on Tuesday that it is partnering with IMAX China to launch a new film fund.

 

The Fund’s Plan

 

The fund is set to have an initial capitalisation of $50 million, with the fund targeting a minimum of 10 pictures in the early stage. The fund could also attract other potential investors in the future.

 

The firms announced the films the fund is looking to invest in would be made in Mandarin Chinese. According to the statement, the fund is aiming to invest anything from $3 to $7 million per film.

 

In the official statement, IMAX said, “The intent of the China Film Fund is to leverage favourable current trends in the Chinese market, strengthening the IMAx brand and capitalizing on relationships across studio, exhibitor and local distribution partners, as well as content creators.”

 

The private equity firm has previously been part of many creative projects in China’s prominent media and entertainment sector. It will be able to harness this expertise and help connect the fund with new Chinese talent in the film industry.

 

Ruigang Li, the chairman of China Media Capital, said in the statement, “We believe that by teaming up with our partners such as IMAX, which has world-class industry leading technology and an extensive global network, we will be able to create a technology-driven force that is unique and immensely helpful to China films’ realizing their full potential in the global market.”

 

IMAX China Ready for an IPO

 

Earlier IMAX announced it’s planning to list the IMAX China unit in the Hong Kong stock exchange. The unit, based in Hong Kong, is majority-owned subsidiary of IMAX Corporation.

 

IMAX China has so far revealed very little about its listing plans. It is expected to list later this year, possibly in the third quarter. Morgan Stanley has been announced as the sole sponsor for the listing process.

 

The company has managed to take advantage of the booming Chinese film industry and posted a 31% rise in net profit last year.

 

Furthermore, the private equity firm became a minority owner of the unit last year when it acquired a 10% stake in IMAX China. The unit also has another private equity firm on board, with FountainVest Partners owning another 10% stake in the company.

 

Booming Market

 

The Chinese film industry is going through exciting times. It is one of the fastest growing film industries in the world, with cinemas increasing their revenue last year by 34% to $4.7billion.

 

Richard L. Gelfond, chief executive officer at IMAX, was quoted on Variety stating, “My wish for the Chinese film industry is that it avoids some of the mistakes of the Hollywood industry, and not just raise costs for the sake of raising costs, but to put the money on the screen.”

 

Like many other markets in China, the film sector is likely to continue to interest private equity firms. It is interesting to see how IMAX China’s listing later will influence the growing attraction of the sector.

 

In the meantime, you can browse private equity deals at DealMarket.

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