Giant screen specialist IMAX is to mount an IPO at its IMAX China division. The public float will take place on the Hong Kong Stock Exchange. The news helped propel IMAX’s US share price to jump 7 per cent in trading May 28th. The actual company which will float is IMAX China Holdings which is registered in the tax-efficient Cayman Islands.
Twenty per cent of the Cayman Island’s IMAX China business will be sold off to the public, with IMAX Corp holding the rest. The slice to be sold is owned by CMC Capital Partners and FountainVest Partners who bought into the Chinese division by paying $80 million for the total 20 per cent stake.
IMAX’s IPO filing makes no commitment as to when the float will happen, and the plan is subject to local regulatory permissions as well as an approval by the Hong Kong exchange itself. But the prospects seem good.
Last year’s 2014 results showed that the Chinese division generated profits of $22.6 million, and up 30 per cent on 2013. Overall revenues were $78.2 million, and up 40 per cent on 2013. Indeed, its Chinese division is doing better than the US domestic sector.
But new investors would be buying into the likely success of IMAX’s Chinese plans. Currently they operate 239 theatres (as at March 31st) but with 219 new screens in the planning or development stage.
The IPO prospectus talks of expansion, and well beyond just more large-screen movies. The Chinese are huge fans of large screen concept and IMAX says they are going to look at carrying more TV dramas on the giant screens, more live shows, sports events and “other alternative content”.