FountainVest, CMC complete exit from IMAX China

The GPs offloaded a 5.9% stake to an unnamed investment bank for HK39.72 per share, according to a release. The price represents a discount to the previous day’s closing price of HK$41.75. Based on market data, the stake size implies about 21 million shares were sold in all.

The company said the sale will help to increase liquidity in the market. CMC will remain a partner of IMAX China and its parent company IMAX Corporation in the IMAX China Film Fund, formed in 2015 to bankroll at least 10 Chinese-language movie productions.

FountainVest and CMC paid $80 million for a 20% stake in IMAX China in 2014. They made a partial exit in the IPO the following year, selling a combined 22 million shares at HK$31 and realizing returns of HK$341 million each.

Last year they sold approximately 20 million shares after agreeing to an extended lock-up period in order to minimize market volatility when other shareholders’ lock-ups expired. Including the 2016 exit and the most recent sale the GPs’ total return is likely around HK$2.5 billion, or 4x the initial capital commitment.

IMAX China was founded in 2012 with the goal of facilitating IMAX Corporation’s entry into China by licensing theater systems to partner movie theaters and by digitally remastering Hollywood and Chinese language films into the IMAX format. IMAX Corporation remains the controlling shareholder in the Hong Kong-listed entity.

The theater business accounts for the majority of IMAX China's revenue, generating about $92 million last year according to the most recent annual report, while the films business generated about $27 million in revenue, albeit at a higher profit margin.

While overall revenue grew from $111 million in 2015 to $119 million in 2016, net profit dropped from $43 million to $38 million over the same period. The company attributed this decline to weaker box office performance, along with an increased number of revenue-sharing theater installations, which require larger upfront investments.

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• Topics
• Greater China
• Media
• Open market
• China
• Hong Kong (China)
• Fountainvest Partners
• Exit
• China Media Capital