SBCVC invests in listed visual effects business Digital Domain - update

SBCVC and CITIC have each acquired HK$84 million in convertible notes in Hong Kong-listed Digital Domain, with an entity known as Zheng Hao committing an additional HK$22.5 million. On conversion - of these and other notes - SBCVC and CITIC would have a combined 19.38% stake in the business. 

In addition, the two investors have also agreed to subscribe to equal portions of 363.3 million shares issued Digital Domain at a price of HK$0.55 apiece, which represents a 9.84% discount to the September 30 closing price. They will together hold a 2.97% stake in the company, according to a regulatory filing. This is prior to any conversion of the notes.

The subscription is conditional on Digital Domain raising at least HK$300 million for the entire equity funding round. The proceeds will go towards investments in visual effects, computer graphics, virtual reality and immersive entertainment businesses, as well as broadening the company's capital base.

"Combining CITIC's abundant global resources and SBCVC's vision and experience in technology, media and telecom investments with Digital Domain's top-notch technology and dedicated management team, we will continue to leave our mark in global and Greater China markets and strive to become the world's best creator and proprietor of VR content," Daniel Seah, CEO of Digital Domain, said in a statement.

Founded in the US in 1993, Digital Domain has provided visual effects for more than 100 movies, including "Iron Man 3," "Titanic," "The Curious Case of Benjamin Button," and the Transformers franchise. The company moved into film production and listed in the US in 2011. However, the following year it filed for bankruptcy and was subsequently acquired by Hong Kong-listed Sun Innovation.

Digital Domain continues to specialize in visual effects and is also involved in developing virtual reality technology and film co-production, most recently backing the 2013 release of "Ender's Game." In addition, the company has interests in property and metals trading.

Revenue came to HK$527.3 million in 2015, down from HK$849.9 million the previous year. Meanwhile, a net profit of HK$33.5 million turned into a net loss of HK$179.5 million.

SBCVC - previously known as SoftBank China Venture Capital - closed its fifth fund earlier this year at $459 million, beating an initial target of $400 million.

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