Village Roadshow Limited (ASX:VRL) has announced that its subsidiary, Village Roadshow Limited Pty Ltd, has signed an agreement to create a funds management business with CITIC Trust Co. Ltd. CITIC is a subsidiary of the state owned CITIC Group, one of China’s largest finance conglomerates. CITIC Group has a long history of managing investment funds in China that allow international investors to contribute. The funds raised from this joint venture will be used for investing in theme parks, entertainment facilities and relevant real estate development throughout Asia with an emphasis on China. Both CITIC and Village Roadshow will create an initial fund of approximately US$500m later this year, with each company committing up to 5 per cent of the initial fund. The fund will be denominated in Renminbi and the joint venture company will be owned 51 per cent by CITIC and 49 per cent by the Village Roadshow subsidiary.
This deal has been signed after two years of negotiations. Village Roadshow has underlined the importance of this deal because it represents a “major new business horizon” for their company. “The signing of this joint venture between CITIC and Village Roadshow marks a major milestone in the progression of Village Roadshow’s theme park expansion into China and South East Asia, and further solidifies our strong trusted partnership with CITIC,” said Co-Executive Chairman and Co-CEO Robert Kirby. Village Roadshow has also cited opportunities for growth outside of China, including Johor Bahru in Malaysia and South Korea. As this deal moves forward, Mr. Kirby has assured investors of the benefits of this joint venture, concluding “Village Roadshow has expertise that is both unique and proven in designing, building, operating, and promoting theme parks. These highly sought after skills combined with CITIC’s vast experience in property development and fundraising, places us extremely well for success in the execution of our growth strategy.”
Shares of VRL are currently up 4c after earlier rising 24c, or 4.4 per cent in the early hours of trading today. VRL’s one-year return is down 18.10 per cent and is down 5.47 per cent so far this year.
Author: Simon Herrmann
Mar 23, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.