Company chairman Low Kwok Wah aims to complete the spin-off and IPO within the next 12-18 months, according to an interview with Bloomberg. Details are some way from being finalized. “Our future growth in China will be funded in great part by Hong Kong,” Low told the news agency.
The company plans to increase its China business some 500% over the next five years. That could come from a mixture of organic growth and acquisitions. Purchases of content producers could be part of the acquisitions mix.
The possible move reflects the scale of the Hong Kong finance market and also the growth of the mainland Chinese entertainment market.
The parent company’s shares are currently traded in Taipei. But due to political tensions between mainland China and Taiwan, which China considers a rebel province with which it will be reunited, its status poses problems for mainland investors. Hong Kong, on the other hand, has vast pools of capital and is easily accessed by financiers from all of Greater China. It was recently the venue for the IPO of mainland Chinese smartphone maker Xiaomi, whose shares have gained 13% in four days to close at HK$19.26 on Thursday.
Booming box office in mainland China is propelling production budgets ever higher. Chinese film makers are increasingly turning to digital effects to deliver a visual experience that competes with Hollywood movies. Local providers are benefiting. One of the world’s largest VFX houses Digital Domain Holdings is currently listed in Hong Kong.