State-backed China Film plans $612 mln IPO blockbuster in Shanghai

By Donny Kwok HONG KONG (Reuters) - China Film Co Ltd, the country's biggest film distributor, said on Wednesday it aimed to raise 4.09 billion yuan ($612 million) in an initial public offering, in what would be the largest in the nation's cinema business. The state-backed movie distributor said the sale would help fuel its expansion in China's booming film industry, a move that will see it compete with billionaire Wang Jianlin's rapidly expanding entertainment empire. The China unit of state-owned China Film Group Corp plans to issue up to 467 million shares in Shanghai, representing 25.01 percent of its issued share capital, according to its prospectus filed with the Shanghai bourse. Proceeds will be used to develop its digital cinema business, replenish working capital and repay loans. China Securities is the sponsor of the issue. Fuelled by a growing urban middle class, China's movie industry saw box office revenue increase 49 percent last year and exceeded 40 billion yuan ($6.1 billion) for the first time, according to the State Administration of Press, Publication, Radio, Film and Television. In May, tycoon Wang's Wanda Cinema Line Corp, the country's biggest cinema operator, said it planned to acquire movie-making affiliate Wanda Media for 37.2 billion yuan ($5.7 billion) in cash and shares. Chinese companies are also ramping up investment in the foreign entertainment industry. Earlier this month, Wanda's AMC Entertainment Holdings Inc said it was buying its European peer Odeon and UCI Cinemas for 921 million pounds ($1.2 billion) including debt. Wanda Cinema's parent, Dalian Wanda Group, acquired U.S. film studio Legendary Entertainment in January for about $3.5 billion. China Film will set the issue price for its offer on July 26, with the trading debut expected in early August. The company said it had distributed 790 local movies and 223 imported movies in the past three years, accounting for 58.27 percent of the market. It controls three cinema chains in the mainland, and invests in four others. Animation has also been a key focus in Chinese companies' drive to develop the film industry. One such effort is Oriental DreamWorks, set up as a joint venture between DreamWorks Animation SKG, China Media Capital, Shanghai Media Group and Shanghai Alliance Investment Ltd. China's fast-growing box office is also a lure for overseas studios eager to tap into the market despite a cap on imported films, censorship concerns and a rising challenge from locally made movies. ($1 = 6.6850 Chinese yuan renminbi) (Reporting by Donny Kwok; Editing by Anne Marie Roantree and Kim Coghill)