Wall Street eyes China's Poly Bona

Distrib says Goldman, Morgan, Bain set to invest $30 mil

HONG KONG/BEIJING -- Investment funds of Wall Street banks Goldman Sachs and Morgan Stanley and private equity giant Bain Capital plan to invest a combined at least $30 million in a Chinese movie distributor soon, chairman of the distributor Poly Bona told Reuters on Wednesday.

Poly Bona, backed by state-owned conglomerate Poly Group, has already attracted investment from U.S. venture capital firms Sequoia Capital China and SIG Asia Investments, which is affiliated with Susquehanna International Group.

Earlier on Wednesday, two sources close to the deal told Reuters that Goldman and two unidentified foreign investors planned to invest at least $30 million in Poly Bona in its new round of private fund-raising, which is set to be the last round before the firm goes public.

In 2007, Sequoia and SIG each invested $5 million in Poly Bona, which holds about a 20 percent domestic market share in domestic movie distribution, in its first round of private fund-raising from external investors.

Yu Dong, chairman and president of Poly Bona, headquartered in Beijing, confirmed Goldman's investment when contacted by Reuters by telephone, and added Morgan Stanley and Bain Capital would join Goldman's planned purchase of part of the company.

"A little bit more time is needed to settle the valuation issue, but the deal is expected to be done by the end of this month," Yu said.

"After all, it is a capital-raising in the financial crisis," he added.

NEXT STOP: NASDAQ

When Goldman and Morgan Stanley completed their investments in Poly Bona, the two Wall Street banks would "naturally" become financial advisers for IPO-ready Poly Bona, one of the two sources said.

Poly Bona aims to go public in the United States next year but its IPO plan would mostly depend on the market environment, said the sources, who declined to be identified as they were not authorised to speak to the media.

Yu declined to comment on a timeframe for the IPO.

Overseas listings are a key route for global private capital investors to exit their investments in China, given the country's strict foreign exchange controls and lack of a Nasdaq-style domestic stock market for small and medium-sized companies.

Besides movie distribution, a core business of Beijing-based Poly Bona, the firm, established in 1999, has also invested in Chinese films such as "Red Cliff" and "The Warlords," according to its website (www.polybona.com.cn). It has been called "China's Miramax" by industry magazines including Variety.
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