Alibaba Pictures raises $1.6b to fund media acquisitions

Formerly known as ChinaVision Media Group, the entertainment unit plans to sell 4.2 billion new shares at HK$2.90 apiece, representing a 19.9% discount to the last traded price of HK$3.62 on Monday, according to a filing. The placement represents approximately 20% of the comapny's total existing issued share capital.

According to The Wall Street Journal, the shares are being placed privately with around 20-30 investors. Half of those are high net worth individuals, while the others are hedge funds and pension funds.

The shares, suspended from trading since Tuesday, dropped as much as 11% when the news was announced. Alibaba Pictures' stock has surged about 145% this year.

The company said the net proceeds would be for general working capital and to fund any "potential acquisitions arising out of media-related investment opportunities that may arise in the future." It said it had not yet identified any targets.

Alibaba Pictures was created last year when Alibaba Group bought 60% of ChinaVision - in which rival Tencent Holding and VC firm Sequoia Capital were investors - for HK$6.24 billion and renamed it. In March, Alibaba announced plans to inject its online movie ticketing and movie production crowdfunding business into Alibaba Pictures.

Alibaba Pictures' revenue dropped 175% to RMB127 million ($20 million) last year, which was blamed on delays in the group's film and TV series distribution and a drop in advertising revenue. It posted a net loss of RMB417 million in 2014, down from a net profit of RMB180 million the previous year.

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• Topics
• Greater China
• Media
• Expansion
• China
• Alibaba Group
• Media
• TMT
• M&A