Huayi, Tencent, Yunfeng buy Hong Kong shell for movie investments

According to a regulatory filing, China Jiuhao Health Industry has issued a total of 6.84 billion shares, or a 50.65% stake, at HK$0.08 apiece through a private placement. The price represented an approximately 91% discount to the closing price of HK$0.88 on the last trading day before the deal was announced.

Shenzhen-listed entertainment group Huayi has agreed to pay HK$196 million for an 18.17% interest to become the largest shareholder of Jiuhao. Tencent will purchase 15.68% for HK$169 million, while Yunfeng will take 5.12% for HK$55 million, investing through its second fund.

Listed in Hong Kong, Jiuhao provides internet healthcare solutions in China. Its core product, the Kangxun 360 cloud health management platform, offers services such as health data collection, real-time alerts, and health assessment and advisory services. The company also already invests in TV and movie production, the filing said.

Jiuhao reported a net profit of HK$56 million last year, compared to a HK$33 million loss in 2013. Revenue increased to HK$110 million from HK$126 million during the same period.

The proceeds of the transactions will be used to develop media-related businesses. Jiuhao will produce 10 films with an unnamed US producer and invest an aggregate amount of HK$369 million in the projects, a statement said. It will also produce three animated films with an undisclosed production house and has agreed to invest an initial HK$187 million in those projects.

Yunfeng, set up by David Yu and Ma, reached a final close of around $1.1 billion on its second fund in May last year. Tencent invested in the fund and also holds approximately of 8.06% Huayi. Yu and Ma own 1.15% and 3.59% of the entertainment company, respectively.

Chinese strategic groups, including Alibaba, Tencent and property developer Wanda Group, are seeking to create media value chains that run the full gamut from content creation to distribution.

Last month, Alibaba agreed to acquire US-listed Chinese online video platform Youku Tudou in an all-cash deal that values the company at about $4.8 billion. Around the same time, Tencent, Alibaba and Oriza Holdings invested RMB10 billion ($1.6 billion) to CMC Holdings, an investment platform launched by Ruigang Li, founder of Chinese media-focused PE firm CMC Capital Partners.

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• Topics
• Greater China
• Media
• Buyouts
• PIPEs
• Hong Kong (China)
• Media
• Yunfeng Capital
• Tencent
• PIPE
• buyout