CMC reaches $350m first close on China media fund

The vehicle has a hard cap of $600 million, according to a source familiar with the situation, with existing LPs accounting for the bulk of commitments. CMC closed its debut US dollar fund at $350 million in early 2014, after about six months in the market, with backing from fund-of-funds as well as international corporate investors. This followed the firm's first renminbi fund, which had a corpus of RMB2 billion ($313 million).

While CMC has plans for another renminbi fund, the US dollar vehicle is being raised as a stand-alone entity, not in parallel with a local currency fund - a strategy pursued by some China GPs, but arguably unsuitable for media investments. Foreign participation in the industry is still subject to restrictions, which would stymie plans for pro rata co-investment by renminbi and US dollar vehicles.

The strategy for the second US dollar fund is largely consistent with that of its predecessor, which focuses on media, entertainment and technology, with a particular emphasis on mobile technology.

CMC has made a number of high-profile investments in recent months, as it seeks to monetize changes in media consumption driven by rising disposable incomes and the rapid adoption of handheld devices. Notably, it agreed a RMB8 billion deal for the broadcasting rights to matches from China's domestic football league, paid $400 million with CITIC Capital for a stake in the holding company of Manchester City Football Club, and bought Hollywood production house Imagine Entertainment.

However, none of these investments came from PE funds. Last year, CMC created CMC Holdings, a vehicle designed to remain invested in assets beyond a 10-year horizon. Typically, these are greenfield projects that require deep operational involvement, such as DreamCenter, an entertainment complex developed in conjunction with Hong Kong's Lan Kwai Fong Group and DreamWorks Animation. The holding company received RMB10 billion in seed capital from Alibaba Group, Tencent Holdings and fund-of-funds Oriza Holdings.

Examples of private equity-style investments by CMC in the mobile technology space include education platform Yuantiku, luxury e-commerce site Secoo.com, online food-ordering platform Ele.me, and online movie ticket site Gewara. The latter has since merged with rival player Wepiao and raised further funding.

The GP also jointly invested $80 million in IMAX China with FountainVest Partners in 2014 at a valuation of $400 million. The business raised HK$1.92 billion ($248 million) through a Hong Kong IPO the following year, allowing the PE firms to realize HK$341 million between them. Another partial exit, thought to have generated around HK$1 billion, came in March of this year.

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• Topics
• Greater China
• Fundraising
• Media
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• China Media Capital
• China
• TMT