Zhongnan Heavy, ZEG Capital launch China media fund
Jiangyin Zhongnan Heavy Industries, a Chinese steel equipment manufacturer, and ZEG Capital, an investment arm of China Zhongzhi Enterprise Group, want to raise up to RMB3 billion ($483 million) for a media-focused buyout fund.
According to a regulatory filing, Shenzhen-listed Zhongnan Heavy and ZEG Capital will form a joint venture called Zhongnan Cultural Media Fund Management. Zhongnan will contribute RMB3 million, with ZEG putting in RMB7 million.
They expect to reach a first close of at least RMB1 billion on the Zhongnan Cultural Media Buyout Fund. ZEG, Zhongnan Heavy and its parent company Zhongnan Heavy Group will invest RMB100 million, RMB140 million and RMB100 million, respectively. The joint venture will commit RMB10 million and the remainder will be raised from the third-party investors.
The fund is seen as an industry consolidation platform that will invest across TV production, internet media, advertising, entertainment programs and online gaming. The GP will have the option of exiting portfolio companies through sales to Zhongnan Heavy.
Last month, Zhongnan Heavy announced it plans to buy Datang Brilliant Media, a TV series producer, as a means to diversify its manufacturing business into media industry. The deal values Datang Brilliant Media at about RMB1 billion.
ZEG Capital is participating in the transaction, taking an approximately 5% stake in the restructured entity.
Founded in 1985, Zhongnan Heavy manufactures steel materials used in pipe fittings, piping fabrication and pressure vessels. Most of its customers are in the petrochemical, shipbuilding, power and oil refining industries.
Founded in 2011, ZEG Capital primarily focuses on buyout, M&A and direct investments. Its parent company - Zhongzhi Enterprise - is a real estate developer.
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