Li Ruigang, the powerful Chinese media mogul in control of TVB, plots IPO in Hong Kong, US markets for US$10 billion of assets

Peggy Sito
·8-min read

Li Ruigang, arguably China’s most powerful media mogul, is aiming to list some of his businesses in Hong Kong and the US to compete with industry powerhouses, putting more than US$10 billion of assets under the spotlight amid fissures in US-China relations.

The 51-year old tycoon is the chairman and chief executive of CMC Inc, a Shanghai-based group founded in 2015 with multi-genre content including films, drama, games, financial media, music and sports. It also owns controlling interests in Hong Kong’s free-to-air network operator Television Broadcasts Ltd or TVB, and Shaw Brothers Holdings.

CMC raised 10 billion yuan (US$1.5 billion) in Series A fundraising in 2018 with the financial backing of investors including Tencent Holdings, Alibaba Group Holding (owner of the South China Morning Post), and real estate developer China Vanke. The funding round pegged the value of Li’s flagship company at 40 billion yuan.

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“We are now considering a listing of CMC Inc in the next two years,” Li said in an interview with the Post at his office in the Cheung Kong Center in Central. “We will float our core businesses, but probably not all of the assets. After evaluating our businesses and different capital markets, it is highly likely that we will choose Hong Kong as the listing venue.”

Li Ruigang, founding chairman and CEO of CMC Inc, also runs a private equity fund backed by Singapore state investment firms. Photo: Handout
Li Ruigang, founding chairman and CEO of CMC Inc, also runs a private equity fund backed by Singapore state investment firms. Photo: Handout

A listing plan will push Li’s media business –including a controlling stake in TVB – into the spotlight just as China starts tightening the space for public dissent and protests in the financial hub, following the imposition of a controversial national security law in June last year. Foreign news reports have also suggested China is seeking to rein in media owners.

To know more about Li’s view on TVB, see a related story from the interview here.

His private-equity firm CMC Capital Partners, founded in 2010 and backed by Singapore’s state investment funds Temasek Holdings and GIC, is also seeking to shepherd 10 consumer and technology-related companies in its portfolio towards stock offerings on Hong Kong and US exchanges, even as the Biden administration has strengthened its accounting oversight of foreign companies traded in New York.

The private-equity firm manages 30 billion yuan of assets. Its portfolio of companies includes video-platform operators Bilibili, Kuaishou Technology and iQiyi, and beauty unicorn Perfect Diary. Many of its unlisted investee firms are ready for stock offerings this year, Li added.

“Hong Kong is the leading financial hub and an international capital-raising platform supported by a well-developed ecosystem of banking, financial, regulatory system and legal services,” he said.

The US markets, on the other hand, continue to be the destination of choice for many non-American companies for fundraising, Li added, enticed by its deep capital markets, active trading and superior liquidity.

The tycoon shot to prominence in the mainland media industry soon after finishing his journalism studies at Fudan University, forging his career and reputation at Shanghai Media Group. He rose to become its president at 33, making him the youngest executive to oversee and later chair one of mainland China’s most powerful state broadcasters, and rub shoulders with the city’s political elite.

His standing would be much coveted by foreign media and entertainment groups looking for an ally in mainland China and global markets, where attempts by billionaire Wang Jianlin have recently unravelled. The country generated US$9.8 billion in box-office takings in 2019, the world’s biggest before the pandemic struck. The mobile gaming industry alone is projected to be worth US$22 billion by 2023, according to a PwC forecast.

“He has the influence in China’s media and culture sectors, and his experiences made him a rare, powerful investor in these areas,” said Yan Jinglan, a professor of foreign studies at the East China University of Science and Technology in Shanghai. “As China gradually opens up its media and entertainment businesses to overseas investment, Li will prove to be a valuable partner for foreign investors and content providers.”

Wang Jianlin of Dalian Wanda speaks to the media after attending the Asian Financial Forum in 2016. The pandemic has hastened the unravelling of his global media empire. Photo: Nora Tam
Wang Jianlin of Dalian Wanda speaks to the media after attending the Asian Financial Forum in 2016. The pandemic has hastened the unravelling of his global media empire. Photo: Nora Tam

Li is feeding CMC Inc’s global ambitions in the media and entertainment business after tasting success from collaborating with industry giants in a US$2.1 trillion global market. The US market alone was worth US$720 billion in 2020, up from US$678 billion in 2018, Statista estimated.

Over The Moon, a 2020 musical fantasy animation co-produced by CMC’s Pearl Studio and Netflix Animation, became the first China-US joint effort to receive an Oscar nomination. It will compete for the Best Animated Feature at the 93rd Academy Awards later this month with other nominees produced by rival studios including Disney and Pixar.

The media and entertainment industry requires heavy capital investment to stay in the game for the long haul, Li said. The cost of producing one episode of a drama needs millions of yuan and developing a big online game runs into hundreds of millions.

In recent months, he has been drawn deeper into the state of affairs at TVB, after an ownership restructuring last year gave him a bigger say in Young Lion Holdings, the investment holding firm that controls 26 per cent of TVB. The loss-making broadcaster is drawing the attention of media watchers as it turns more pro-establishment while China tightens its grip on the industry.

“I’m very dissatisfied with TVB’s performance,” he said in the interview, firmly focused on the operating results. “Speaking as a director and the largest shareholder, TVB’s business conditions have been worrying me very much.”

Li’s media empire under CMC Inc includes units which produce TV and online dramas for the mainland China market, such as the Chinese historical drama Nirvana in Fire. Another is Like a Flowing River, which chronicles budding entrepreneurs who found success during China’s economic reforms between the late 1970s and early 1990s.

A still image from Nirvana in Fire (Langya Bang). Photo: Handout
A still image from Nirvana in Fire (Langya Bang). Photo: Handout

The mogul predicts the media and entertainment industry will be further amplified by technology advancement and the evolving behaviour of younger consumers. CMC Inc is keeping an eye on the home market while scouring for global opportunities, he added.

“From a business perspective, we prefer a market that has abundant business opportunities and provides a favourable business environment,” he said. He reckons CMC can grab more opportunities in China than in the US, after facing delays in approval for an office in Los Angeles, California, to manage more cross-border deals.

Even so, CMC Inc has had many fruitful ventures with foreign partners despite widening cracks in China’s international relations in recent years over issues related to Xinjiang, Hong Kong, the South China Sea and technology wars.

Those ventures included a US$1.5 billion plan with Discovery to develop an entertainment theme park in Chengdu, the capital of southwestern Sichuan province. CMC Inc is also in a consortium with the UK’s Merlin Entertainments that will complete the US$550 million Legoland Resort outside Shanghai in 2024.

Mobile gaming is another business arena it aims to conquer, given the sheer number of players and the fact it is a way to export culture. China has 660 million online gamers, almost half of the nation’s population, according to the China Audio-video and Digital Publishing Association.

“We make games first for profit. This is business, and then Chinese games go overseas and bring Chinese culture out,” Li said. “This will kill two birds with one stone.” CMC, he stressed, is not in [this] to export soft power, but is purely engaged in the game business.

He explained the same using the global appeal of South Korea’s K-pop culture as an example. Big Time Entertainment, a talent management group that oversees popular K-pop band BTS, made a smashing stock debut last October.

“It is just like the pop culture of South Korea. They do not aim to export Korean culture, but it is an international business in the entertainment industry. The effect is to make money and promote Korean culture.”

CMC Inc entered the fray through its games distribution company called Zlongame, which was founded in 2015. As a yardstick, Tencent Holdings’ runaway success, “Honour of Kings” has raked in almost US$10 billion in revenue since its first release in 2015, making it the highest grossing multiplayer online battle game.

“Big capital inflows helped China’s online gaming industry,” said Cao Hua, a partner at the private equity firm Unity Asset Management. “They helped improve its development capabilities, and some martial arts-related games are well received abroad.”

“Our strategy is to produce premium content,” said Li, who maintains that large-scale content investment is a prerequisite for a successful media platform in the future, including in the gaming arena. “Big investment, big output.”

CMC will require ever more capital to expand and compete. So does the stable of companies within his private equity firm, of which about 10 will seek to go public in 2021, Li said. He is hedging his bets on Hong Kong and the US markets.

“In the past, when companies looked for dual listings, they talked about the US and London markets,” he said. “Now, it is about the US and Hong Kong. This is recognition.”

Additional reporting by Daniel Ren in Shanghai

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