Advantage moves into China with Qin Jia Yuan media deal

The private equity firm holds convertible bonds and warrants equivalent to a 5% stake, and will send two representatives to QJY’s board. QJY will also use Advantage Partners’ networks in Japan to strengthen its business and expand further there.

Advantage paid approximately a 15% premium over the closing price on the last trading day before the signing of the agreement with QJY, or a 6% premium over the average closing price for the last ten trading days. Advantage’s stake has a lock-up period of 25 months from the completion date, estimated to be July this year.

The Advantage investment was made shortly after the company received $185 million from Kabouter Management LLC, a Chicago-based investment firm with some $185 million under management, which took 5.08% of QYJ.

Founded in 1995 in Hong Kong, QJY focuses on TV advertising, TV production, and investment facilitation and business matching between TV stations and investors. In TV production, it has signed a 20-year collaboration agreement with nine TV stations across China, including Shanghai, Beijing and Guangdong; and 95% of its total revenue is related to China.

Advantage Partners said that it has been in talks with QJY for almost two years, as the company was not looking at strategic investors. Nevertheless, QJY reached a stage where it sought to raise funds for further growth, explained Emmett Thomas, Partner at Advantage Partners. When asked by AVCJ why Advantage chose a Hong Kong-based media company as investment target rather making direct capital injections into mainland media companies, Thomas said, “Actually, we have been looking at numerous media companies in China for the past few years.” He added that Advantage found QJY’s business model and experienced management team, as well as their new businesses plan, highly attractive. Lincoln Pan, a Director at Avantage, said that this investment will be the first step in longer-term cooperation with QJY.

The PRC government has until now imposed comprehensive restrictions on foreign investment in culturally-related businesses such as media, publishing, advertising, exhibitions and major events, printing and art. Last year however, Premier Wen Jiabao announced the “Cultural Ventures Planning” initiative, which encourages and welcomes foreign participation in these cultural areas.

“Since QJY’s business is and will be engaged in six of these areas, QJY firmly believes that our cooperation under such favorable circumstances will be highly successful,” said Dr. Anita Leung, Founder and CEO of QYJ.

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• Topics
• Greater China
• North Asia
• Media
• Expansion
• Emmett Thomas
• Advantage Partners