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BEIJING — Huayi Brothers Media will try to raise 1.2 billion yuan ($176 million) on Thursday in its initial public offering as China’s first listed movie company, almost double the amount the Beijing-based firm first said it would aim for on the nation’s new startup bourse.
According to the IPO prospectus on the Huayi Web site, the company will list 42 million class A shares starting at 28.58 yuan ($4.18) each on the Growth Enterprise Market of the Shenzhen Stock Exchange.
Huayi earlier said it planned to raise 620 million yuan ($91 million) via the share sale to supplement its working capital and to invest in new cinemas.
The IPO is set to go off following recent Chinese government encouragement of companies in the closely-monitored culture industry to seek public funds to boost their size, competitiveness and the number of quality films made for domestic consumption.
In 2008, ticket sales at China’s roughly 4,000 modern, urban movie theaters rose 30% to reach 4.3 billion yuan ($630 million), up a fifth year in a row averaging more than 25% gains.
Although this is small change compared to the $9.8 billion in 2008 U.S. movie ticket sales, Chinese cinema building continues apace with the growth of the country’s burgeoning middle class.
China’s economic growth was 7.9% in the second quarter, boosting confidence that growth will at least match and possibly exceed the government’s 8% target for the year.
Huayi’s upping its ante comes amidst media analysts’ predictions that Chinese boxoffice returns will continue to soar despite the recession and industry frustrations over censorship, piracy and a less than fully-open distribution system that remains largely controlled by state-run movie company The China Film Group.
Last month, CFG officials reiterated claims at least two years old that the company was also in preparations for an IPO of its own through the establishment of a joint-stock company.
The Huayi IPO also comes on the heels of the announcement in Sept. that Huayi has partnered with the News Corp units Fox Filmed Entertainment and STAR TV to make the Chinese language romantic comedy “Hot Summer Days.”
Huayi representatives reached by telephone declined comment on Thursday’s planned IPO.
Founded as a small advertising firm in 1994 by the brothers Wang Zhongjun and Wang Zhonglei, Huayi Bros. Media is best known for its productions of films by Chinese director Feng Xiaogang, perennial hits that appeal to a modern, urban Chinese sensibility.
Over the years Huayi has pioneered the use of product placement in Chinese films, gotten investment from Hong Kong tycoon Richard Li, earned praise from U.S. investment bank Morgan Stanley and worked in a lucrative co-production partnership with Sony Pictures, with which it made the 2005 boxoffice hit “Kung Fu Hustle” by Hong Kong director Stephen Chow.
Earlier this year, director Feng’s late 2008 release, the romantic comedy “If You are the One,” broke the long-standing Chinese boxoffice record held by James Cameron’s “Titanic.” Starring comic actor Ge You and Taiwanese actress Shu Qi, “If” earned 303 million yuan ($44 million).
On Friday, Huayi’s current Chinese boxoffice hit, “The Message,” a 1940s Sino-Japanese spy thriller, will close the Pusan International Film Festival in South Korea.
The other firms expected to list on Shenzhen’s Nasdaq-like GEM market will mostly be technology and innovation-oriented startups.
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