Alibaba buys stake in Wanda Film in USD1.2b share sale

Alibaba Group Holding Ltd. has agreed to buy a stake in Dalian Wanda Group Co.’s cinema operator as billionaire Wang Jianlin’s real estate-to-entertainment conglomerate turns to another Chinese tech giant and a government-backed company for investments totaling about 7.8 billion yuan (USD1.2 billion).

Alibaba is to pay 4.68 billion yuan for a 7.66 percent stake in Wanda Film Holding Co., making the e-commerce giant the second-biggest shareholder, Wanda Film said yesterday in a regulatory filing. Beijing Cultural Investment Holdings, controlled by the Beijing government, will pay 3.12 billion yuan for a 5.11 percent stake.

This is Wanda Film’s first major sale of shares to external investors after listing on the Shenzhen bourse in 2015 and comes as the group’s billionaire founder Wang is selling off assets from real estate to hotels to help pay down debt. The fundraising also comes in the midst of an asset restructuring at Wanda Film, whose shares have been suspended from trading since July.

Alibaba and Cultural Investment agreed to pay 51.96 yuan a share, in-line the 52.04 yuan last closing price in July.

Investing in Wanda could help Alibaba founder Jack Ma play a larger role in China’s film industry, forecast to become the world’s largest box-office by 2020. In 2016, Alibaba Pictures Group Ltd. bought a stake in Amblin Partners, the outfit backed by Steven Spielberg to work together on production, marketing and distribution both globally and in China. Billionaire Ma is competing with Tencent Holdings Ltd.’s Pony Ma Huateng, as both invest in movie and TV production.

This is the second time in a week that a Chinese tech giant has invested in Wang’s Wanda Group, which has been under Chinese government scrutiny for “irrational” outbound investments. Last week, a consortium led by Tencent agreed to buy a 14 percent stake in Dalian Wanda Commercial Management, formerly known as Dalian Wanda Commercial Properties Co., for $5.4 billion, easing pressure on the unit to complete a listing by September.

In addition to the investments, Wanda Film will cooperate with Alibaba and Cultural Investment on areas including film distribution, marketing, financing as well as pre-screening advertising and online ticketing, according to the filin Bloomberg