AID Partners to list HMV in Hong Kong via reverse merger

An 81.63% stake in HMV will be sold to China 3D Digital Entertainment for a consideration of HK$408.1 million ($52.6 million), according to a regulatory filing. In return, the Hong Kong-listed company will issue 1.12 billion shares to AID, giving the PE firm 22.59% of the enlarged share capital. AID will become the controlling shareholder and China 3D will be renamed HMV Digital China Group.

The private equity firm bought HMV's operations in Hong Kong and Singapore, plus all its licenses in mainland China, Macau and Taiwan, in February 2013 for an undisclosed sum.

At that time, HMV had six stores in Hong Kong and two in Singapore, plus an e-commerce business in Hong Kong. The Hong Kong businesses as a whole posted annual revenue of HK$300 million ($38 million). During its holding period, AID Partners has reduced the number of music and movie retail stores to five and opened two restaurants and a cafe under the HMV brand.

The Asian business is a legally separate entity from HMV in the UK, which went into administration one month before AID acquired the Asian business.

For the year ended December 2014, HMV recorded HK$43.7 million in revenue and a net loss of HK$24.1 million. Unaudited net liabilities stood at HK$39.5 million as of June 2015. WiL agreed to buy an 18.37% interest in the company for HK$70 million earlier this month.

AID Partners Capital, which is listed on Hong Kong's GEM board, said it would generate a gain of approximately HK$224 million from the sale to China 3D, before tax and transaction costs, based on the unaudited net asset value of HMV.

China 3D is involved in artist management and music production, the production and distribution of films and TV programs, and the operation of cinemas. It recorded revenue of HK$111.2 million in 2015, down from HK$199.7 million the previous year, while net losses widened from HK$15.7 million to HK$96.6 million.

China 3D's acquisition of HMV is still subject to shareholder approval.

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• Topics
• Greater China
• IPO
• Consumer
• Southeast Asia
• AID Partners
• Exit