China to Suspend Refinancing, M&As in Entertainment, Culture to Divert Funds to Real Economy
Yicai Global
/SOURCE : Yicai
China to Suspend Refinancing, M&As in Entertainment, Culture to Divert Funds to Real Economy

(Yicai Global) April 12 -- China will stop refinancing and mergers and acquisitions in the culture and entertainment sectors, including film and television, according to a senior executive at a southern China brokerage.

Regulators haven't responded to the claim, the 21st Century Business Herald reported today.

The market has been anticipating an explicit ban across these industries, the report said. "China has already discouraged such projects and is becoming more overt about it," a sponsor at a smaller brokerage added.

The move looks to further divert funds from the virtual economy to support real economic development, several investment bankers said today, who added that regulators actually began tightening control at the start of the year.

Vicki Zhao (Zhao Wei), a Chinese film and TV star, attracted attention when she proposed to acquire a controlling stake in Zhejiang Wanjia Co. [SHA:600576] for CNY3 billion (USD435 million). Capital markets were skeptical about the deal, which ultimately did not go through. Speculation suggests the deal was abandoned after the target was scrutinized by regulators. However, Tibet Longwei Culture and Media Co., the actress' company, said its requests for finance were rejected by banks.

Similar reports surfaced last May, suggesting refinancing in entertainment and culture had been suspended. The China Securities Regulatory Commission called off cross-industry private placement by listed companies in four sectors, including fintech, gaming, film and television, and virtual reality, the reports said. For example, cement makers would not be permitted to invest in those four industries through private placement or fundraising.

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Keywords: China , Business , Investment , M&A , Supervise