STX To Launch IPO On Hong Kong Stock Exchange In 2018

[The Ultimate Nullifier]

deadline.com/2017/09/stx-entertainment-ipo-hong-kong-stock-exchange-first-quarter-2018-1202178526/


STX To Launch IPO On Hong Kong Stock Exchange In 2018

STX Entertainment, the company founded three and a half years ago by Robert Simonds and Bill McGlashan of TPG Growth with investment from Gigi Pritzker and Chinese concern Hony Capital, plans to raise $500M in an IPO in the first quarter of 2018. It’s been known that STX has been talking about mounting an IPO for some time, and has been steadily growing its business over the past year.

The company was valued at $1.5B last year, however, The Wall Street Journal today reported the company could be valued as high as $3.5B after the IPO. Since its inception, STX has been modeling itself to become a major entertainment company along the lines Viacom.

In August 2016, China’s Tencent and Hong Kong telecom giant PCCW led an investment round in STX with the aim of building out its studio. That included a TV division, international distribution and an acquisition unit to bring in digital media companies. In March of this year, they even announced an animation and family division to be kicked off by the Uglydoll movie, which is based on the David Horvath line of plush characters and will be directed by Robert Rodriguez.


While the company has had a number of box offices misses, it scored big with the 2016 comedy release Bad Moms, which amassed a total of $183.9M at the worldwide box office and spawned a sequel. Bad Moms Christmas will be released this November.

The company has been methodically adding divisions over the years and hiring top executives, including former Universal chairman Adam Fogelson as chairman of its STXFilms division and former Universal international chief David Kosse who helped open their UK office.

The company launched initially by entering into direct agreements with U.S. exhibitors to ensure screens for its movies, which was unconventional. It then sealed a multi-year Home Entertainment deal with Universal and produced a 13-episode series State of Affairs, which it sold to NBC. More recently it entered into a three-year marketing and distribution deal with EuropaCorp, and also acquired Surreal, a VR content producer, last year. It recently launched a VR Channel with Google Daydream to distribute original VR content.

Upcoming film projects from STX include The Foreigner starring Jackie Chan and directed by Martin Campbell which will be released next on Oct. 13. Other projects include The Happytime Murders starring Melissa McCarthy and Maya Rudolph, I Feel Pretty with Amy Schumer and Michelle Williams, an untitled romantic comedy for Anne Hathaway, Gringo with Amazon Studios starring Charlize Theron, Second Act, a romantic comedy starring Jennifer Lopez and directed by Peter Segal and Aaron Sorkin’s Molly’s Game starring Jessica Chastain.

TV projects being developed include a Kevin Kwan (Crazy Rich Asians) scripted series.

[The Ultimate Nullifier]

www.hollywoodreporter.com/news/stx-progressing-hong-kong-ipo-1043930

[The Ultimate Nullifier]

www.hollywoodreporter.com/news/why-a-hong-kong-ipo-may-make-sense-stx-entertainment-1045395

Why a Hong Kong IPO May Make Sense for STX Entertainment

Bob Simonds' decision to take his studio public in the Asian exchange strikes some as simply a financial play, but others see an overdue opportunity to strengthen ties with China.
With China clamping down on capital flow into Hollywood — and box-office disappointments piling up — Bob Simonds' STX Entertainment Studio is looking to an unconventional IPO in Hong Kong to maintain momentum.

On Sept. 27, The Wall Street Journal reported that STX is planning to raise around $500 million in an initial public offering on the Hong Kong stock exchange in the first quarter of 2018, with a valuation pegged at around $3.5 billion.

Insiders say it's about time that the studio's early private-equity investors, which include TPG Capital and China's Hony Capital, would be pushing for an exit. And with Bad Moms ($184 million worldwide) the sole blockbuster among the studio's 14 releases to date, fundraising can be expected to be a concern for the company.

Launched in 2014, STX, which would not comment to THR for this article, is said to be targeting the Hong Kong exchange to be closer to its many local financial partners, which, along with Hony, include tech giant Tencent and Hong Kong telecom company PCCW, both of which took minority positions in the studio in 2016. But financial insiders say the Los Angeles-based studio's unconventional choice of Hong Kong is likely a matter of necessity as much as preference. "The stock exchanges in New York and mainland China require that a company has cleared certain benchmarks for profitability or growth over a sustained period," says one China-based financial executive. Given the studio's patchy track record and relentless expansion, it's unclear whether STX currently could clear these hurdles.

By contrast, STX's uniqueness in the Hong Kong market — as a Hollywood entertainment company endorsed by some of the region's biggest names — should indeed deliver a higher valuation than could be achieved elsewhere.

The studio became a trailblazer in the Chinese market in 2015, when it signed a landmark, three-year slate financing deal with influential Beijing-based studio Huayi Brothers Media. But two years on, only one film — STX's 14th and most recent title, the action thriller The Foreigner, starring Jackie Chan and Pierce Brosnan — has obtained a release in China, opening to $22 million in the Middle Kingdom (a U.S. release is set for Oct. 13).

Many analysts are optimistic about the company's forthcoming slate, which includes Aaron Sorkin's potential awards contender Molly's Game and a raft of female-led comedies including a Bad Moms sequel and I Feel Pretty with Amy Schumer. None of those titles look particularly China-friendly, however.

"It's possible that the company intends to better leverage its powerful lineup of Chinese partners — which it has always said is part of the strategy," says Stan Rosen, a professor at USC who specializes in the Chinese entertainment industry. "But we have not seen these plans yet."

This story first appeared in the Oct. 4 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

subscribe.hollywoodreporter.com/sub/?p=THR&f=saleb&s=IH1402HR20