GDC Holdings boasts the largest CG production studio in Asia, having 16 sound stages, and impressive facilities for 3D animation for TV and motion pictures. (Note that in the animation world, “3D animation” refers to computer rendered graphics, rather than hand-drawn.) GDC released its first animated feature in 2005, titled “Through the Moebius Strip.” Its GDC Technology arm, manufacturer of digital cinema servers, was founded in 1999. GDC Holdings, among other investors, completed the sale of a majority of its shares this month to Carlyle Group.
It’s not clear what motivated the sale. It was reported in July that revenues at GDC Technology had grown from HK$334M (US$42.9M) in 2009 to HK$567M (US$72.9M) in 2010, and that it was and that net profit tripled from HK$45.8M (US$5.89M) to HK$155M (US$19.9M). GDC Holdings experienced a run-up in share price in 2010, only to witness a 50% drop in valuation in April of this year. By July, GDC Holdings signed a deal with US-based Carlyle Group, agreeing to sell 80% of GDC Technology based on a company valuation of HK$740M (US$95M). GDC Holdings, however, only held 58% of the company at the time, and it was left to them to acquire the remaining shares from other shareholders. In the sale agreement, GDC Holdings stated its intent to retain a stake in the company, as high as 20%. Prior to the sale, the breakdown of ownership was as shown below:
|Greater Appeal Investments||21%|
Carlyle announced the completion of the acquisition this month. Included in the investment consortium is one of China’s best known entrepreneurs, Jack Ma of Yunfeng Capital. Jack Ma also holds a major stake in Yahoo!, among other technology companies. GDC Holdings reports that it retained a 12% stake following the sale. The question everyone wants to ask is if Dr. Chong sold his 7%, which would have pocketed him a tidy US$6.5M. Would you have sold?