FountainVest, CMC buy 20% stake in IMAX China

The investment is structured as two equal tranches, the first payable immediately and the second due in early 2015. It was not disclosed what the two private equity firms' respective shares in the business will be.

China is the world's second-largest movie market with box office sales growing 27% year-on-year in 2013 to reach $3.6 billion, according to the Motion Picture Association of America. This compares to a 4.6% increase in global sales to $35.9 billion.

Greater China is also IMAX's second-largest and fastest-growing market. The company opened its first theater in the country in 2011 and had a total of 173 in operation as of December 2013, with an additional 239 planned for installation by 2021. Greater China accounts for 58.7% of IMAX's current global backlog.

Last year the company amended its joint revenue sharing agreement with Wanda Cinema Line Corporation, China's largest movie theater chain by outlets, to include an additional 120 IMAX theaters. It brings Wanda's total commitment to 210 IMAX theater systems.

IMAX has also entered into a partnership with China-based TCL Multimedia Technology - a subsidiary of television manufacturer TCL Corporation - to develop a premium home theater system.

"We expect this strategic alliance, along with the strength of our existing relationships with Chinese partners like Wanda and TCL, will help us usher in the next phase of growth for IMAX in China," Richard L. Gelfond, CEO of IMAX, said in a statement. "Today's agreement represents a joint commitment to further develop China's movie industry by offering premium entertainment experiences, fostering the development of Chinese content and continually focusing on innovation."

Investors have been emboldened by China's moves to open up its cinema market in recent years. In 2012, the annual quota of foreign films allowed for distribution increased from 20 to 34, provided the additional 14 are in IMAX or 3D format. Foreign studios were also awarded a larger share of the box office revenues that must be split with domestic distributors - 25% compared to 13% before.

Last month, Hony capital and TPG Capital's growth equity arm entered into a partnership with two Hollywood producers to set up a film studio, partly with a view to targeting the China market.

The previous year, two China-focused film funds - Harvest Seven Stars Media and China Mainstream Media - launched within a fortnight of one another. These funds would support local productions, potentially working with overseas studios.

CMC was set up in 2010 and claims to be China's first media and entertainment-focused private equity fund approved by the National Development and Reform Commission (NDRC). Sponsors include China Development Bank, Wenhui-Xinmin United Press Group and Shanghai Media Group.

Ruigang Li, CMC's chairman, is the former chairman of Shanghai Broadcasting and president of Shanghai Media Group.

Previous investments include the purchase of New Corporation's China portfolio, separate joint ventures with Dreamworks Animation and Hong Kong broadcaster TVB, and the acquisition of a stake in OCJ, a Chinese TV shopping business.

FountainVest, which closed its second China fund in November 2012 at $1.35 billion, targets companies in the consumer, media and technology and new industrial and healthcare sectors. Previous media exposure includes participation in the $3.7 billion privatization of Chinese outdoor advertising business Focus Media.

The Raine Group acted as financial advisor to IMAX on the transaction. CMC formed a strategic partnership with The Raine Group early last year.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Media
• Expansion
• Greater China
• Fountainvest Partners
• China Media Capital
• Consumer
• Media
• Growth capital
• China