CAA's New China Frontier: Strong Investor Now, Possible IPO Later?
"We have a new level of access to resources and capital for our growth," president Richard Lovett tells THR about the agency's new partnership with Chinese equity firm CMC Capital Partners.
CAA could finally go public — in China.
The agency's partnership with leading Chinese equity firm CMC Capital Partners to form CAA China, announced April 17, is being praised by experts as a smart move. Observers speculate that CMC, which has made an undisclosed minority investment in the agency, may even help it to an IPO on the Hong Kong stock exchange, similar to what it did for Imax. A year after CMC, led by prolific dealmaker Li Ruigang, joined with fellow Chinese investor FountainVest Partners to take an $80 million, 20 percent stake in the company, Imax China raised $248 million in its 2015 initial offering. (CMC divested its remaining shares April 6.)
Before going public, CAA China must ramp up its business, and CMC offers two key ingredients to do so. "Now that we have a best-in-class, highly trusted local partner, we have a new level of access to resources and capital for our growth," CAA president Richard Lovett tells THR.
CMC, one of China's most established Hollywood partners, offers connections that can give the agency a deeper foothold in the country's woolly representation landscape, where many top stars have direct pre-existing relationships with local studios or even small talent management firms of their own. Although CAA represents A-listers including Zhang Yimou and Donnie Yen for the U.S. or international markets, CMC can open doors to help it more easily package locally, plus explore new opportunities, namely in internet, distribution and ancillary markets. "This [deal] gives CAA a partner that can help finance expansion," says Manatt Phelps attorney Lindsay Conner, "as well as one with great connections into new business areas in China."
Some watchers were surprised to see CMC invest in CAA, given the Chinese company's strategic partnership with boutique bank the Raine Group, which was co-founded by WME-IMG. The CAA rival launched its own Chinese joint venture with Sequoia Capital in June. But "Chinese investors are sophisticated and will look for good opportunities whenever they arise," says Conner. "[CMC gets] a chance to see Hollywood from an up-close perspective they didn't have before."
This story first appeared in the April 26 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.