Alibaba acquires 4% stake in Korea's SM Entertainment
Chinese internet giant Alibaba Group has acquired a 4% stake in S.M. Entertainment, a South Korean music agency, for KRW35.5 billion ($29.8 million).
Alibaba acquired 870,000 newly-issued shares at KRW40, 808 apiece, according to a filing. The new investment is part of a strategic partnership between Ali Music and S.M. Entertainment covering online music distribution in China. A local partner will allow S.M. Entertainment to expand its business in China, a statement said.
There were rumors that Alibaba had bought a $90 million stake in S.M. Entertainment in 2014, but the entertainment company denied it.
Alibaba launched Ali Music in July last year as part of its wider push into the digital entertainment business. The Chinese firm has also established movie subsidiary Ali Pictures and sports management firm Ali Sports.
Founded in 1995, S.M. Entertainment is one of the largest record labels in South Korea's K-pop industry. It manages groups such as Exo, Girls' Generations, Super Junior, F(x) and Shinee. Through management of actors and artists, the company is also invovled in the production and distribution of music records, as well as movies and TV dramas.
In September 2014, S.M. Entertainment teamed up with Taiwan's Fubon Group and Hong Kong's Media Asia to establish a media-focused fund to jointly invest in Chinese film and TV production.
S.M. Entertainment's revenue came to KWR287 billion in 2014, up from KRW268 billion the previous year. Net income fell from KWR18 billion in 2013 to KWR5 billion in 2014.
The S.M. Entertainnment deal follows an agreement struck last month that will see Korean instant messaging operator Kakao Corp buy a majority stake in Loen Entertainment, a music streaming platform, record label and artist management business. Affinity Equity Partners will generate a more than 6x return on its investment in Leon.
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