STX Entertainment CEO Hints at IPO

CEO Robert Simonds said an initial public offering would be a “really really good option” for the Los Angeles-based studio.

STX Entertainment, the Hollywood start-up studio backed by Chinese investors, could be headed for an IPO to help the company expand more aggressively in the near future.

The studio, which aims to become a bridge between the world’s two biggest movie markets in the United States and China, is reportedly eyeing an initial public offering in Hong Kong.

“We’ve got a lot of options right now, that would be a really good option — [I’m] not allowed to talk about that kind of stuff — but that would be a really, really good option,” STX Entertainment Chairman and CEO Robert Simond told  Bloomberg TV at the JPMorgan Global China Summit in Beijing on Monday.

“Ultimately, the goal is to have access to even more capital. Right now we’re fully funded, to do everything that we need to do. But having access to capital that would allow us to expand more aggressively is I think every CEO’s dream.”

In November last year, Simonds told the South China Morning Post that STX was finalizing plans to set up a Hong Kong office and that the city is its favored option for a listing venue.

Founded in 2014 by Simonds and Bill McGlashan, STX struck a landmark co-financing and distribution deal with Huayi Brothers in 2015 in one of the first major investments by a Chinese company in a Hollywood studio film slate.

Huayi CEO’s Wang Zhonglei, also known as James Wang,  has made it clear that he hopes to “renew and deepen” his company’s cooperation with STX “beyond slate financing.”  Huayi sees the partnership as integral to its ‘going global’ strategy.

The partnership has been a happy marriage so far, according to Simonds, who says the Chinese studio has been a “spectacular partner.”

“When we formed STX, we wanted China to be part of the DNA of the company, so instead of just being one of those companies that is trying to reach our hand into China, we wanted to bridge these two very, very large markets.”

“We’ve been really, really obsessed with making sure that our partners are smarter than we are, more connected than we are, and make sure that we do everything right, and Huayi has been an integral part of that,” Simonds said.

STX’s other Chinese investors include PCCW and Hony Capital. Their cash infusions have enabled the Los Angles-based studio to produce over 30 major studio titles generating over $6 billion.

The upside for the studio in the near future could be even better with Simonds saying he expects China to raise the quota floor for imported films at some stage this year.

“All the guidance is that it absolutely will,” he told Bloomberg. “So that feels like the direction that things are moving in.”

In the meantime, The Foreigner, an action movie produced by STX in conjunction with Chinese partners Sparkle Roll and Huayi Brothers, and starring Jackie Chan and Pierce Brosnan, is set to hit screens in China in September.

“We’re feeling like that thing could do incredible business here,” Simonds told Bloomberg. “So if it works here and elsewhere, we’re in good shape.”