China’s Wanda Group Sells Stake To Film & TV Producer Ruyi Holdings

AsianFin--Dalian Wanda Group has sold its 49% stake in its investment arm to local film and TV producer China Ruyi Holdings in an on-going effort to reduce debt.

Wanda has sold the stake in Beijing Wanda Investment for US$315 million as part of fundraising efforts to repay debt of US$400 billion due this past weekend.

Wanda Investment owns 20% stake in the group’s Shenzhen-listed entertainment division Wanda Film, which operates a cinema chain in China, finances Chinese film-making and retains a stake in Legendary Entertainment.

Earlier this month, Wanda Investment separately sold an 8.26% stake in Wanda Film for US$306 million. The buyer was Lu Lili, the wife of Shen Jun, controller of financial data platform East Money Information.

Analysts believe that this change in equity may be related to the future development strategy of Wanda Film. After Wanda founder Wang Jianlin "let’s go" of Wanda Film, Wanda Film will be more independent in its future development and will focus more on its own operations and development.

Tencent-backed Ruyi invests in movies including recent hit comedy Post Truth and the blockbuster Detective Chinatown franchise, as well as TV series including Nirvana In Fire.

Industry insiders noted that Tencent may use this move to counter Alibaba Digital Media & Entertainment and its subsidiary Alibaba Pictures. Both sides have made moves in online literature, film and television, streaming media, and ticketing. After the completion of this transaction, they will have one more advantage in theater chains.

Dalian Wanda, a real estate developer transformed into an entertainment empire under the helm of Wang, once harbored grand aspirations in Hollywood. This included plans to invest in U.S. studios and the acquisition of prominent North American cinema chain AMC Theatres and Legendary Entertainment.

However, the group experienced setbacks when Chinese authorities cracked down on highly indebted companies in 2017. Consequently, it divested its Chinese studios and theme parks, its Los Angeles property development, and a significant portion of its stake in AMC. Legendary sought external funding from private equity firm Apollo last year.

In addition to these challenges, China's current debt issues in the real estate sector and the adverse effects of the Covid-19 pandemic on the film industry have further strained Dalian Wanda in recent years. The company is also actively seeking a buyer for its Australian cinema chain Hoyts.