IMAX expands China operations

Patrons watch a 3-D IMAX movie at a theater run by Dalian Wanda Group Co in Beijing. NG Han Guan / AP

IMAX has a Chinese dream for the fastest growing film market in the world.

On April 16 in Beijing, the company known for its giant-screen technology announced the official start of the cooperation with CMC Capital Partners, China's leading investment fund chaired by Li Ruigang, and FountainVest Partners, a leading China-focused private equity firm.

The two Chinese companies purchased a 20 percent stake in IMAX's Greater China subsidiary for $80 million on April 8.

"At this juncture, it makes sense to bring in Chinese investors to help us better address local market dynamics and further optimize our business in China," says IMAX Corp's chief executive officer Richard L. Gelfond.

"We believe Li and CMC, as well as FountainVest, are ideal partners, whose status, leadership and expertise will be invaluable in helping us accomplish these goals."

According to the company's 2013 annual report, China has become the fastest growing market for IMAX, contributing $56.48 million, a 25.7 percent growth over 2012's $44.92 million, to the company's $288 million revenue in 2013.

China now has 173 IMAX screens, and Gelfond expects an additional 239 theaters (including two upgrades) to be installed by 2021.

The company, which has a 15-year plan to tap into the Chinese market, has worked with multiple Chinese filmmakers to make IMAX-format movies, such as Feng Xiaogang's The Aftershock and Cheang Pou-soi's Monkey King 3-D, so far the highest-grossing Chinese film for IMAX, with ticket sales reaching $160 million. The next big project would be Zhang Yimou's Coming Home in May.

At the ongoing Beijing International Film Festival, a screening is specially designed to showcase IMAX films, including the Transformers series and The Avengers.

The introduction of CMC and FountainVest is believed to be a prelude to IMAX China's initial public offering, and Gelfond confirms that IMAX expects the deal to lead to an ultimate IPO.