Carlyle-led group buys into Asian cinema digital server provider
A consortium led by The Carlyle Group has purchased an 80% stake in GDC Technology, Asia’s largest cinema digital server provider. The investment was led by the $1 billion Carlyle Asia Growth Partners IV and the other participants included Yunfeng Capital, the venture fund set up by Alibaba Group founder Jack Ma.
Financial terms of the transaction were not disclosed, but sources told The Financial Times that the consortium paid about $75 million. It made the purchase from existing shareholders including Beijing Capital Steel and Hong Kong tycoon Ka-shing Li.
GDC Technology was previously majority owned by Hong Kong-listed GDC Holdings. The company said in a September 7 filing that, acting for itself and for other shareholders, it had sold approximately 80% of GDC Technology and 100% of GDC Digital Cinema Network to an undisclosed buyer. The group accrued around HK$347.5 million ($44.6 million) from the sale. It retains an 11.93% holding in GDC Technology.
The transaction was based on an agreed valuation of HK$739.9 million for GDC Technology and $3 million for GDC Digital Cinema Network.
GDC Technology was founded in Hong Kong 12 years ago by Man-Nang Chong, who remains a shareholder in the company and will continue to serve as CEO. GDC distributes its products in more than 20 countries and had more than 11,000 installed servers as of September 2011. It ranks second globally, based on publicly disclosed installed servers, with Dolby, Sony and Doremi the main competition.
The company claims to be the largest digital cinema server provider in China with a 4,500 installed servers and a 54% market share. China's cinema digitization level is as high as 70%, according to a recent study by Entgroup Consulting. This is higher than average - of the estimated 150,000 movie screens in the world, 25% were digitized by the end of the first quarter of this year - because multiplexes are newly built and have digital players from the outset.
GDC Technology is also the largest player in Asia with more than 6,800 installed servers.
"GDC Tech's sustained development, market leadership and strong management team inspired our confidence in the company's adaptable expansion model and high growth potential. We are excited to play an enabling role in the global cinema digitalization by supporting GDC Tech and Dr Chong," said Wayne Tsou, managing director and head of Carlyle Asia Growth Capital, in a statement.
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