Li Ruigang Starts Countdown to IPO of CMC Inc. in Hong Kong

Patrick Frater
·5 min read

Chinese media group CMC Inc. is being readied for a share listing in Hong Kong. As its founder Li Ruigang is one of the best-connected media entrepreneurs in Asia, what exactly goes into that mix will have resonance in Hollywood and China.

“We are now considering a listing of CMC Inc in the next two years,” Li told the South China Morning Post last week. “We will float our core businesses, but probably not all of the assets. After evaluating our businesses and different capital markets, it is highly likely that we will choose Hong Kong as the listing venue.”

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Fudan and Columbia University-educated, Li is a high-flyer who headed the powerful state-owned Shanghai Media Group, at the age of 33, before launching China Media Capital in 2009.

Styled as China’s first media investment fund, China Media Capital has played multiple roles as venture capitalist, private equity firm and tactical investor, and along the way raised funds in Renminbi- and dollar-denominated tranches from well-placed overseas media concerns including Warner Bros., 21st Century Fox and DreamWorks, advertising giant WPP and Singapore’s two sovereign wealth funds.

Among the company’s early deals was the 2010 acquisition of the Star China TV channels bouquet sold when Rupert Murdoch famously assessed that, as a foreign company, 21st Century Fox would never be allowed to scale up in China. With that went the Golden Harvest / Fortune Star library, one of the world’s two largest catalogs of Hong Kong movies, including those by Bruce Lee. The catalog is rivalled only by the Celestial Pictures-operated Shaw Brothers collection.

Guided by boutique investment bank Raine and a close friendship with Jeffrey Katzenberg, Li was able to establish joint venture operations with Warner Bros (Flagship Entertainment and Gravity Pictures) and Katzenberg’s DreamWorks SKG to form Oriental Dreamworks, an animation studio that was a producer on “Kung Fu Panda 3” and the more recent “Abominable” and “Over The Moon” titles.

Other deals with U.S. and international partners have included buying a stake in Brian Grazer and Ron Howard’s Imagine Entertainment in 2016, and the 2017 deal that established CAA China as a joint venture and gave Li’s group a minority stake in the parent Creative Artists Agency. There have also been stakes in IMAX China (since sold), technology plays such as NextVR, and an indirect stake in Manchester City soccer club. CMC is also partnered with the U.K theme park developer Merlin Entertainments.

These days Li’s cluster operates as CMC Inc. (previously known as CMC Holdings) and as private equity firm CMC Capital (previously known as China Media Capital). The PE firm manages RMB30 billion ($4.58 billion) of assets, with a portfolio reported to includes stakes in video-platform operators Bilibili, Kuaishou Technology and iQIYI, and cosmetics brand Perfect Diary.

CMC Inc. the bit that is likely to be floated, was previously valued at some $6.1 billion (RMB40 billion) when it raised RMB10 billion ($1.52 billion) in Series A fundraising in 2018. Investors then included Tencent Holdings, Alibaba Group and real estate developer China Vanke.

Company sources told Variety that CMC Inc. portfolio companies currently include: TV producer Daylight Entertainment; games developer and distributor Zlongame; periodicals publisher Huasheng Media; Pearl Studio, the successor to Oriental Dreamworks, which became a wholly-CMC group company after DreamWorks pulled out in 2018; and Television Broadcasts, better known as TVB, Hong Kong’s leading free-to-air TV broadcaster.

Daylight is one of China’s top TV producers with a string of hits across the period, family and contemporary genres including “Nirvana In Fire,” “Minning Town,” “Like A Flowing River I & II,” “All Is Well,” “The Story of Minglan” and “The Disguiser.”

Zlongame, which has development bases in the Chinese mainland and in Taiwan, now has a distribution footprint in 30 countries and regions, which has been used to handle titles including “LaPlace M,” “Goddess of Genesis,” “Second Galaxy,” “Love And Sword,” and “Legend Of Nine Tail Fox. Its recent original titles include “Langrisser,” and “Kalpa of Universe.”

Huasheng is the publisher of Chinese versions of international titles including Wallpaper, WSJ Magazine, NYLON and NYT Kids. It has forayed into offline and online commerce, vacation and retail design consultancy, education, youth communities, and conferences, and even has a Wallpaper Bookstore.

The two years ramp up to the Hong Kong IPO may provide time to revive the fortunes of Pearl Studio and TVB. In December, Pearl Studio told Variety that it was “transitioning its content strategy” to become more of a platform. Among other changes, Pearl will focus more on “Chinese-language animation movies for which China is the main market.”

Li last week saved his toughest words for TVB. A “radical reform” is needed at the company, he told the SCMP. “From people’s mindset, the business system, its development strategy, content creation to facilities … from hardware to software, TVB is far behind the industry’s standards.” He pointed out that mainland Chinese companies have become vastly more sophisticated communications forces that are adept at using social media and artificial intelligence. “TVB did not make any progress,” he said.

A management reshuffle at TVB is now expected following Li’s remarks. The first confirmation of that came on Monday with the retirement of CEO Mark Lee, who has been within the top echelons of the broadcaster since 2007.

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