PAG to buy cinema business from Chinese property developer
PAG has agreed to acquire Shanghai Xingyi Cinema Management from Hong Kong-listed property developer Seazen for about CNY 1.4bn (USD 187m).
The entity involved appears to be under PAG's fourth flagship pan-regional private equity fund. That vehicle is currently in the market and had raised approximately USD 2.2bn as of May, according to regulatory filings. The target size for the fund has been reduced to USD 6bn from USD 9bn.
Established in 2015, Xingyi operates and manages 144 cinemas across China. It swung from a profit of CNY 39.8bn in 2021 to a loss of CNY 64.9bn in 2022, according to a filing. Net profit for the first half of 2023 was CNY 86.8bn.
The purchase price may rise to CNY 1.5bn if certain conditions are met. Xingyi has agreed to repay a CNY 856.4m loan to its parent. Seazen, which generated CNY 116bn in revenue last year but saw its core earnings collapse, will use the proceeds of the sale to strengthen its capital reserve and reduce its gearing ratio.
Chinese property developers continue to be challenged by weak post-pandemic sales and reduced access to bank financing. Several companies have defaulted on their debt, or come close to doing so, while China Evergrande Group is currently undergoing a restructuring.
PAG sees offline consumer entertainment as back on the radar post-pandemic. It was active in this theme last September, acquiring Japanese amusement park operator Huis Ten Bosch for an equity valuation of about USD 772m.
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