Media and entertainment group Village Roadshow Ltd (ASX: VRL) saw its shares rise by as much as 4.9% this morning after the company announced it would join forces with CITIC (a Chinese state-owned investment group) to invest in theme parks and entertainment facilities across Asia.
Village Roadshow is a leading film producer while it also owns and operates cinemas and theme parks including Wet'n'Wild, Sea World and Movie World. In an effort to continue its expansion into Asia, the company will join CITIC to establish an initial US$500 million funds management business to invest in theme parks and entertainment facilities, with its particular focus being the Chinese market.
According to the release, the funds management company for this and future funds will be 51% owned by CITIC, while the remaining 49% will be owned by a Village Roadshow subsidiary.
Currently, both entities will commit to invest up to 5% of the initial US$500 million, while CITIC will be responsible for raising the balance of required investment into the fund. Village said: "The signing of this joint venture between CITIC and Village Roadshow marks a major milestone in the progression of Village Roadshow's strategic theme park expansion into China and South East Asia." It will also provide the company with greater certainty, control and confidence with its expansion plans.
Should you buy?
Shares of Village Roadshow have fallen considerably over the last few months, partially due to unseasonably heavy rain during the holiday season which impacted attendance at its theme parks. However, with its shares trading at $5.54 (down from a high of $5.73 earlier in the day), Village Roadshow could be worth a position in your portfolio especially given its international growth prospects.
