(Updates throughout with IMAX statement, quotes)
By Adam Jourdan
SHANGHAI, April 8 Canada-based cinema chain IMAX
Corp said it planned to sell a fifth of its Chinese
subsidiary to local investors, in a move that could help it
eventually list the unit in Hong Kong.
The company, known for 3D projection, will sell 20 percent
of IMAX China Holding Inc to investment fund China Media Capital
and private equity firm FountainVest Partners as it looks to
expand its theatre network in China and strengthen ties with
local industry and government.
IMAX issued a statement late on Tuesday that confirmed a
report from the Wall Street Journal earlier in the day.
The two Chinese investors will each pay around $40 million
for stakes of 10 percent, with the first of two equal
instalments due on Tuesday and the second instalment by early
2015, the statement said. IMAX will keep majority control.
China is the group's fastest-growing and second-largest
market, accounting for around 20 percent of revenue, its 2013
earnings report showed. Sales in China rose 25.7 percent to
$56.5 million last year, versus a slight dip in the United
"At this juncture, it makes sense to bring in Chinese
investors to help us better address local market dynamics and
further optimize our business in China," IMAX Chief Executive
Richard Gelfond said in the statement, adding China was an
"enormously complex market".
The cinema chain also confirmed that it planned to list its
Chinese subsidiary, without providing further details.
China is fast becoming one of the world's major cinema
markets, but the government closely controls the industry using
quota systems and censorship of local and imported films.
IMAX, China Media Capital and FountainVest Partners could
not immediately be reached for further comment.
The Wall Street Journal earlier reported that IMAX was
aiming for a Hong Kong initial public offering in the next five
years but had not ruled out a mainland listing in Shanghai or
IMAX has over 170 screens in China and plans to open around
240 more over the next five years to tap a local box office,
which China's film bureau put at around 21.8 billion yuan ($3.5
billion) last year.
IMAX is also looking to extend its reach into home theatre
in partnership with Shenzhen-based TCL Multimedia Technology
China Media Capital, one of the potential investors, is
headed by businessman Li Ruigang, who is also involved in a
Chinese joint venture with U.S. film studio DreamWorks Animation
($1 = 6.2123 Chinese Yuan)
(Editing by Christopher Cushing and Jane Baird)