AID Partners makes bet on HMV

Yet this hasn't put off AID Partners, a consumer and entertainment-focused GP, which acquired HMV's Hong Kong and Singapore unit last week. Kelvin Wu, principal partner at AID, says not only is the business healthy but maintains that brick-and-mortar stores still have a place. "Distribution is not simply a means passing on the product it is also about providing an experience, it is about presentation, it is an art," he explains, adding that there are no plans to shut stores. 

HMV Hong Kong and Singapore (HMV HK) comprises six stores in Hong Kong, two in Singapore and an e-commerce site run out of Hong Kong. Last year the Hong Kong businesses as a whole posted revenues of HK$300 million ($38 million), with Singapore contributing around HK$70 million. In Hong Kong, HMV accounts for 29% and 16%, respectively, of the music retail and visual media retail markets. In Singapore, the share is 25% and 10%.

Details were not disclosed but the transaction is said to be in the middle of AID's typical $10-100 million range. The purchase is one of a series of disposals by HMV Group since it went into administration last month. As part of the deal, HMV HK will receive a perpetual license to trade under the HMV brand, and it will also have rights to the brand in mainland China, Macau and Taiwan.

In same way that TV technology is yet to see out the death of the cinema, Wu maintains there is still longevity in CDs and DVDs. Furthermore, he expects that technological developments like Blue-ray and 4K TV will ensure a consumer preference for purchasing high data capacity discs over the time-consuming practice of downloading movie files. HMV HK has already shown resilience in the face of Apple launching iTunes Asia with sales falling by less than 1%.

Despite this, HMV is still looking to move beyond just providing content. The company has already revamped its offering by selling peripheral goods such as headphones, consumer electronics, books, magazines and T-shirts. "We can say we are more of an entertainment retailer than a CD shop," says Emily Butt, managing director of HMV HK. "I think in HMV there is a reputation for being a bit edgy and bit different and we want to maintain the high-end and specialist shopping experience."

Wu adds that while the rise of digital content and piracy has attacked the company's top line, the Asia business has not suffered the same fate as its UK counterpart because the stores are exclusively in city locations. "The UK has a few metropolitan stores but the stores in big trouble are those in the small cities," he says. "In a metropolitan setting this model still can grow."

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• Topics
• Consumer
• Greater China
• Buyouts
• Buyout
• Media
• Southeast Asia
• AID Partners
• Hong Kong (China)
• Singapore
• buyout
• Media
• Consumer