China Film to Raise $625 Million in IPO to Fund Movies, Cinemas

  • State-owned unit to sell 467 million shares at 8.92 yuan each
  • Offering would be largest for China’s entertainment industry

China Film Co., the nation’s largest movie distributor, plans to raise 4.2 billion yuan ($625 million) in an initial public offering in Shanghai to fund movie production and cinema investments in what would be the largest such sale in China’s entertainment industry.

The unit of state-owned China Film Group Corp. plans to sell as many as 467 million shares at 8.92 yuan each, valuing the company at 16.7 billion yuan, the company said Wednesday in a filing.

The film maker and distributor is raising money amid a boom in the industry as more Chinese go to cinemas, setting box office receipts on course to surpass the U.S. as the world’s largest next year. Cinema ticket sales in the country jumped 21 percent in the first six months of the year to 24.6 billion yuan, according to researcher Entgroup.

At about 23 times 2015 earnings, the offer prices the company lower than its peers such as Huayi Brothers Media Corp., which is trading at about 35 times profit, and Wanda Cinema Line Co., which is at about 68 times. China IPOs have been, in practice, limited to pricing at a maximum 23 times profit after regulators cracked down on share sales in 2014.

The offering could surpass theme-park operator Haichang Ocean Park Holdings Ltd.’s $363 million Hong Kong share sale in 2014 to become the biggest IPO in China’s entertainment industry, data compiled by Bloomberg show.

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