PCCW, Tencent Invest in STX at Valuation Near $1.5 Billion

  • Proceeds will pay for expansion into television, digital media
  • Producer of ‘Bad Moms’ gains content partners in Asian markets

PCCW Ltd. and Tencent Holdings Ltd. are leading an investment round in STX Entertainment, giving the distributor of the feature films “Bad Moms” and “The Gift” funds to build its TV division, expand internationally and acquire digital media start-ups.

The deal values STX, founded by producer Robert Simonds and private-equity investor Bill McGlashan, at almost $1.5 billion, according to a person with knowledge of the matter. The companies, which announced the funding in a statement Thursday, declined to comment on the financial details.

Though STX began by making movies, Simonds wants to build a more diverse media enterprise that makes TV, virtual-reality content, short-form video and mobile applications. Including an expanded credit facility, STX now has more than $700 million to accelerate its spending on production and acquisitions, said the person, who asked not to be identified because the terms aren’t public.

“Our intention was never to just make a bunch of movies,” Simonds said in an interview. “We built up the movie division to attract stars and storytellers.”

Simonds plans to offer actors and filmmakers creative opportunities ranging from personal apps to a virtual-reality experiences. The company will seek acquisitions in the coming months to help realize those ambitions, he said. STX plans to release a dozen motion pictures a year and has secured deals for 22 television shows, according to the statement.

“We want to go out there and make some inorganic purchases,” Simonds said. 

The tie-up with PCCW, a telecommunications company controlled by billionaire Richard Li, will give STX access to audiences in Hong Kong, Southeast Asia and India. The company also has a content partnership with Tencent, Asia’s biggest internet company.

Simonds produced more than 30 movies before launching STX with McGlashan, the founder and managing partner of TPG Growth, an arm of private-equity firm TPG Capital.

As part of the funding, STX also received new investments from East West Bancorp’s Dominic Ng, as well as existing investors TPG, Hony Capital, business interests of Gigi Pritzker, Michael Pucker and their immediate family and William Wrigley Jr., according to the statement. Ng will join STX’s board.

Kirkland & Ellis LLP acted as legal adviser and Raine Group LLC acted as financial adviser to STX.

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