STX Entertainment, a US entertainment company backed by Chinese internet giant Tencent and Hony Capital, is eyeing an initial public offering (IPO) in Hong Kong, making it the first Hollywood firm to list in the city if the plan pushes through.
In a draft prospectus filed with the Hong Kong Stock Exchange, STX Entertainment did not disclose the fundraising target and the timeline for the offering but said financial institutions JP Morgan and Goldman Sachs will be sponsors of the share issue.
STX was founded in 2011 and began operations in 2014. Among its backers are Hony Capital, Tencent, and PCCW Media. It also has commercial relationships with Alibaba, Huayi Brothers, and XG Media, among others.
The Burbank, California-based studio said it does not simply export Hollywood films into the Chinese market but aims to integrate China into the development process.
An example of a successful Sino-US co-production is Jackie Chan’s recent action feature, The Foreigner, with his company Sparkle Roll Media, which garnered over $145 million in worldwide box office receipts.
“Our partnership-based approach is to marry Hollywood’s storytelling know-how with global distribution with prominent media players creating content across platforms in China,” the company said in the draft prospectus.
STX’s listing in Hong Kong comes as China’s box office is expected to surpass that of the US by 2020.
According to Frost & Sullivan, the global film industry has grown since 2012 and is estimated to have generated approximately $40 billion in box office receipts last year. US and China were considered the two largest box office markets globally, accounting for 47 per cent of total global box office revenue.
“We aspire to become the pre-eminent media company serving the US and Chinese entertainment markets. In the last five years, the Chinese box office grew from $2.7 billion to an estimated $8.2 billion, creating an attractive opportunity,” STX said.
The studio’s preliminary prospectus showed that revenues in the financial year ended September 2017 reached $201 million, a loss of nearly $12 million. The subsequent quarter showed revenues climbing 41 per cent to $93 million, with losses of $28.1 million.
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