Sequoia To Back Poly Bona

SHANGHAI (Reuters) – Chinese movie distributor Poly Bona is expected to receive a combined $30 million in investments soon from two venture capital funds ahead of a planned overseas listing, industry sources familiar with the deal said on Monday.

Sequoia Capital China and SIG Asia Investments, which is affiliated with U.S. financial firm Susquehanna International Group, may finalise the deal with Poly Bona in a month or two, said the sources, who declined to be identified as they were not authorised to speak to the media.

The talks had been proceeding for several months, they added.

Sequoia and Poly Bona declined to comment, while no comment was immediately available from SIG.

If successful, it would be the second round of private fund-raising for Poly Bona, which is backed by Chinese state-owned conglomerate Poly Group and plans to go public, likely on the U.S. Nasdaq market, said the sources.

In 2007, Sequoia and SIG each invested $5 million in Poly Bona, which holds about a 20 percent domestic market share in movie distribution, in its first round of private fund-raising.

“They know each other very well after the first round of fund-raising so it's not surprising to see them increase their investment,” said one of the sources.

“Meanwhile, Poly Bona's goal is also quite clear: an overseas listing,” he added.

Overseas listings are a key route for venture capital firms to exit their investments in China, given the country's strict foreign exchange controls and lack of a Nasdaq-style domestic stock market for small and medium-sized companies.

Beijing-based Poly Bona, established in 1999, has also invested in Chinese films such as Red Cliff and The War Lords, according to its website (www.polybona.com.cn). It has been called “China's Miramax”by industry magazines including Variety.

Last week, sources familiar with the situation told Reuters that Huayi Brothers, one of China's largest filmmakers, plans to go public this year, which would make it China's first listed film studio.

By George Chen
(Editing by Edmund Klamann)