China Film Corporation recently announced that it is aiming to raise $610 million in its upcoming initial public offering or IPO. The firm, which is the distribution unit of the state-owned China Film Group, is slated to go public on July 28. China Film Corporation's target, when achieved, will get down in history as the biggest ever IPO in China's entertainment history.
The company's plan to go public was initially received with a lot of skepticism, especially with the current slump in terms of cinema ticket sales in China. Nevertheless, the company plans to float 467 million shares prior the sales. China Film Group will still own two thirds of China Film Corporation, down from its current 93 percent stake, according to Forbes.
China Film Group plans to use the funds raised from the upcoming public offering to finance productions and cinema related projects. This will include the construction of 91 theaters, and the production of 53 feature films. The plan also includes the production of at least a dozen TV series, all of which will happen within the next three years.
According to Variety, China Film Corporation reported a 73 percent profit growth last year which amounted to $130 million. The sales terms also hint at a possible market capitalization of around $2.35 billion and a record breaking price to earnings ratio of 17 times.
The China Film Corporation IPO was, in part, approved last week by the China Securities Regulatory Commission following its decision to unfreeze the IPO pipeline in mainland China which had been rocked by a major stock market drop last summer. China Film Group have been hinting its desire for partial privatization for at least a decade now, but its previous efforts were stalled by either unfavorable market condition or corporate reorganization.
China Film Corporation is considered as the most dominant film distributor in the county. The company controls the distribution of all major Hollywood titles in the China.
