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Thursday, July 12, 2018, 10:32
Special effects maker plans HK IPO for mainland unit
By Bloomberg
Thursday, July 12, 2018, 10:32 By Bloomberg

Patrons watch a 3D IMAX movie at a theater of Wanda cinema run by Dalian Wanda Group Co in Beijing, China, May 21, 2012. (PHOTO / IC / CHINADAILY.COM.CN)

Movie and television post-production house VHQ Media Holdings Ltd plans to spin off its Chinese mainland operations and list the unit in Hong Kong SAR to help fuel ambitious growth targets in the booming Chinese movie industry.

The Chinese Taipei-listed visual effects company expects to be ready for an initial public offering in the next 12 to 18 months, VHQ Chairman Low Kok Wahsaid in an interview in Taipei in June. Details, including planned size and underwriters have yet to be determined.

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VHQ sees a share sale in Hong Kong as a way to boost its presence in the Chinese mainland, the world’s second-largest movie market, as well as offering a better valuation, Low says.

VHQ plans to spin off its China operations and list the unit in HKSAR to help fuel ambitious growth targets in the booming Chinese movie industry

The company’s future growth in mainland “will be funded in great part by Hong Kong,” said Low. A unit traded in the city will help bring prominent investors and “add fire power.”

Low said he has talked with what he called the “big boys” about bringing them in as cornerstone investors in the last stage before the Hong Kong IPO, without identifying any of the companies. Alibaba Group Holding Ltd and Dalian Wanda Group Co are among the companies VHQ has previously worked with.

China is challenging North America as the world’s biggest movie market. Last year, China’s box office grew almost 30 percent to US$8.6 billion, while North America’s slid 2.7 percent to US$11.1 billion, according to analysis by Bloomberg Intelligence. Chinese movie-theater receipts overtook North America in the first quarter of this year, driven by strong releases during the key Lunar New Year holiday season, including Forever Young, starring Zhang Ziyi.

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VHQ is also seeking to expand through the acquisitions of content producers, Low says, targeting a fivefold increase in sales in China over the next five years, driven by growing revenue from television and internet content. The nation currently contributes 65 percent to 70 percent of the company’s revenue.

VHQ controls less than 2 percent of the Chinese market for post-production and visual effects, according to Low. The company aims to increase its number of staff to 1,000 in China in the next two to three years from the current 400.

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