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IMAX CEO: IPO of China arm still a long way off

The IMAX cinema chain does not plan to list its China unit for another five years, its CEO told CNBC on Thursday, but when the time comes it will take place in Asia.

CEO Richard Gelfond's comments follow the sale of a fifth of its Chinese subsidiary earlier this month to local investment firm CMC Capital Partners - an investment fund focused on media and entertainment - and Chinese private equity firm FoutainVest Partners. The firms will pay $80 million for the 20 percent stake; IMAX did not receive a premium price for the stock.

Gelfond said the deal was part of the company's plan for its IPO, but was not in a position to clarify a timeframe.

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"It's too early to say as we're talking about a five-year time period. I think we'll have to see how the regulatory environment in mainland China evolves, and how long it takes, and what the rules are, and then we'll make a decision," he said. "Clearly we want to do it in Asia but it's too soon to decide where we do it in Asia."

IMAX has been rapidly expanding in China over recent years, with the number of theaters jumping from 11 in 2010 to 173 currently. The firm plans to add another 237 cinemas over the next five years.

A general view of atmosphere during the raising of the world's largest IMAX screen at TCL Chinese Theatre on August 23, 2013 in Hollywood, California.
Imeh Akpanudosen | Getty Images Entertainment | Getty Images
A general view of atmosphere during the raising of the world's largest IMAX screen at TCL Chinese Theatre on August 23, 2013 in Hollywood, California.

Gelfond dismissed concerns that a slowdown in China's economy could lead to a decline in spending on luxury activities. The average cost of an IMAX cinema ticket ranges from $16 to $24 in China, more expensive than standard cinemas because it offers its viewers a digitally enhanced viewing experience.

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"For the right premium product people are paying up. It's a territory where...there's a great appetite for new technology [and] there's not a lot of competition for entertainment dollars from the likes of sports leagues and concerts," he said. "People are paying and they're paying in increasing numbers."

China's film market restricts foreign movie imports to 34 titles a year on a revenue sharing basis. This figure was raised from 20 in 2012, and will reportedly be raised by a further 10 by 2017-2018, according to media reports.

IMAX's Gelfond said they had been able to get around the challenge of these restrictions by showing local Chinese films.

"Two or three years ago we started doing local Chinese films. So we are taking the highest quality, highest production, best director films, and we're releasing them in IMAX. We did a film called Monkey King that was our most successful Chinese film," he added.

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Gelfond added that he did not think he had been shortchanged in the recent sale of part of its China holdings and said the move was more strategic.

"The valuation was in the range of fairness. I wasn't out to get the last nickel off the table, it was much more important to us to find the right strategic investor," Gelfond said.

IMAX previously said the sale to Chinese investors would help strengthen government and industry relationships.

"This is like a mark of approval from some of the smartest media investors in China and I think it's long term, I think it's a good thing to do," he added.

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