Bona Film Group Prepares For IPO, Stock Market Return

Bona Film Group, one of China’s most successful private film studios, is in the final stages of listing on the Shenzhen Stock Exchange. The company lags behind last year’s top-grossing Chinese film “Battle of Changjin Lake.”

The move to IPO represents a return to public company status for a company that is often ahead of its time.

Bona is an early wave of Chinese companies listing in the US, and was listed on the Nasdaq in 2010, hoping that US investors and financial markets will have a better understanding of the media business – therefore, Bona’s valuation is higher than in Hong Kong or listed in mainland China.

Bona became one of the first Chinese companies to exit the U.S. securities market when the venture failed to provide the expected boost. In 2015, the company Talisman’s founder, distributor-turned-producer, took Bona private with help from investors in the media and tech industries. It is understood that he has tried several times to get Bona listed in Hong Kong or Hong Kong. exchanges in mainland China.

The company has now laid out details of the new launch in about 50 regulatory filings, including a 735-page prospectus and a 113-page summary.

The company will sell 275 million new shares in an offering backed by blue-chip mainland companies China Dragon Securities and Citic Securities. The amount of new capital it brings will only be known when the stock price is disclosed later this week. The counter is scheduled to start trading next Tuesday.

Yu is the largest shareholder, holding 28% of the shares. Alibaba and Tencent, which participated in the delisting operation in 2015, also hold large stakes.

While other Chinese studios have warned of tough times — Huayi Brothers has lost money for three years in a row, and Wanda Films recently warned of an $85 million loss in the first half of the year — Bona’s profitability has soared on the back of a flood of patriotic movie titles. Revenue rose 82 percent to 1.47 billion yuan ($217 million) in the six months ended June. Revenue increased fivefold to RMB 310 million (US$ 45.8 million).

Boehner’s decision to withdraw from the U.S. stock market, where Chinese companies fell out of favor with investors long ago, may now be followed by other, larger companies.

Alibaba, which set the record for the largest IPO on the New York Stock Exchange, filed last week to convert its secondary listing in Hong Kong into a joint primary listing. Details matter.

On the one hand, Chinese companies face increasing pressure to comply with U.S. accounting standards if they want to maintain access to U.S. organized capital markets. But they are also subject to Chinese regulations designed to limit the transfer of data outside of China. Both countries have national security concerns about their presence in the U.S.

Alibaba’s decision to conduct a co-primary listing in Hong Kong is aimed at ensuring it retains its public company status and allows investors to continue trading shares if it is forced to leave the U.S.

The move also has a second notable benefit, namely that Hong Kong’s initial listing will allow Alibaba’s shares to be traded through the Shanghai-Hong Kong Stock Connect, a mechanism that allows two-way trading of stocks and mutual funds in mainland China and Hong Kong. Until then, most ordinary individual investors in China were unable to invest in the country’s most iconic private companies.

Alibaba shares initially surged on the news. But it has since retreated as U.S.-China tensions have apparently grown unabated and the Chinese economy has slowed significantly.

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