Wanda Cinema to Raise RMB 1.26B in Shenzhen IPO

Wanda Cinema Line, the movie theatre operator belonging to billionaire property developer Wang Jianlin, has scaled back plans for its initial public offering on China’s Shenzhen exchange under instruction from Chinese regulators.

According to a report in Reuters this week, Wanda Cinema now plans to raise RMB 1.26 billion ($203.26 million) by offering 60 million shares for around RMB 21 per share. The share sale would make available about 10.7 percent of the total company, and no date was specified for the offering.

Word of the smaller than expected offering follows less than one month after the Chinese property and entertainment conglomerate had a smaller than expected debut for its commercial property division on the Hong Kong exchange.

Wang, who made his fortune building China’s biggest chain of malls and hotels at unbelievable speed, is now turning his focus to cultural industries, including his theatre chain and a planned series of theme parks which he says will rival Disney.

Scaled Back IPO Follows Earlier Denial

The new terms of Wanda Cinema’s share sale means that Wang will be bringing in about 37 percent less cash than what he had hoped for as recently as December, when company sources had stated a RMB 2 billion target for the domestic IPO.

According to the Reuters report, the scaled-back offering comes after the China Securities Regulatory Commission urged the company to lower its price per share from its earlier target. The authorities are said to being using lower share prices for IPOs as a way to cut back on insider trading.

China’s stock market has been on an unprecedented bull run recently as the government has attempted to build up the interest in publicly traded equities.

Wanda’s first attempt at listing its theatre chain failed to receive approval from government regulators after the authorities said the company’s application lacked proper documentation.

Second Disappointing IPO for Wanda

The smaller than expected offering comes less than one month after Wanda Commercial Properties brought in $3.7 billion through its listing on the Hong Kong stock exchange.

Although Wanda Commercial’s IPO made it the second-largest publicly held commercial developer in the world, the proceeds of the offering still fell well short of Wanda’s initial target of $6 billion.

The developer has faced challenges in the last year as its revenues have failed to keep pace with its geographic expansion leading to a high levels of debt, and many analysts have begun to question the company’s ability to sustain its breakneck growth. Just last week the developer announced that it was closing ten of its department stores, and restructuring another 20.

Wanda Shifting Towards Entertainment

By listing its theatre chain, Wanda is taking another step in shifting its focus away from traditional property development, and more towards entertainment.

In 2012, Wanda made its first big splash internationally by acquiring US theatre chain AMC, and Wanda Cinema is said to already control over 14 percent of China’s RMB 29.6 billion movie market.

In December, the company launched the latest of its theme parks in Wuhan, and Wang Jianlin has predicted that the company’s plans for a chain of entertainment destinations featuring local culture will outdraw Disney’s Shanghai park, which is projected to open in 2016.