US boutique bank unites with Chinese fund

Financial Times
By Matthew Garrahan
January 23, 2013


A boutique merchant bank backed by some of the biggest names in Hollywood and Silicon Valley has struck a deal with a Chinese state-owned fund to work together on media, sport and entertainment acquisitions.

Raine’s partnership with China Media Capital, which manages a Rmb5bn ($805m) fund, is the latest sign that China’s nascent but fast-growing media sector is keen to borrow expertise and contacts from established western operators.

Li Ruigang, CMC chairman, told the Financial Times that while he will initially focus on deals in China, “by working with Raine we will also look for global [investment] opportunities”.

CMC has a controlling stake in Star China, CMC’s joint venture with News Corp, and last year struck a deal to develop an animation production studio in Shanghai with DreamWorks Animation, the studio behind the Shrek and Kung Fu Panda films.

CMC’s partnership with Raine, which has its own fund of about $500m, gives it access to some of the biggest names in Hollywood and Silicon Valley. Marc Andreessen, the Facebook board member, and Terry Semel, the former chief executive of Yahoo, are investors in Raine’s fund, as are Jay and Miky Lee, from the family that started Samsung.

Masayoshi Son, founder of SoftBank, the Japanese media group, has also invested in Raine, which last year advised SoftBank on its $8bn capital injection into Sprint Nextel.

Joseph Ravitch, a former Goldman Sachs partner who cofounded Raine, said the Chinese media market was growing exponentially. “China will have 40,000 cinema screens in five years from 9,000. It used to be irrelevant [to Hollywood] but now it represents 10 per cent of the global box office”.”

But Chinese groups have been equally keen to venture abroad. For example Dalian Wanda, the Chinese real estate and shopping mall conglomerate is expanding aggressively in the US following its $2.6bn takeover of AMC Entertainment last year.

CMC’s Mr Li said he was working to raise a new international media investment fund that would be privately owned and managed in dollars.

Raine recently took a small stake in Important Studios, the new production studio founded by Matt Stone and Trey Parker, the creators of South Park and The Book of Mormon.