Phoenix Media plans to invest 371 million yuan in shares of PPTV

Today, Phoenix shares (601928, closing price of 10.58 yuan) announced that the company plans to invest 371 million yuan in Jiangsu Emerging Industry Investment Fund (hereinafter referred to as the Jiangsu Fund) and used for special investment in PPTV. After the transaction is completed, Phoenix Stock will hold 9.56% of indirect shares of PPTV.

According to statistics, PPTV was established in 2004 and is one of the leading domestic online video companies that have penetration on PC, mobile, and OTT. At present, the advertising share in the online video market accounts for about 6.6%, ranking second in the industry, and it is an independent video company. Its users on the desktop PC reached 270 million users. At the end of 2012, UV reached 34 million, and about 70 million users were deployed on the mobile terminal. Its mobile end user scale and usage duration, app downloads and other indicators are among the top in the industry. Currently, the major shareholders of PPTV are Suning Yunshang Overseas SPV, Hongyi (and its co-investors) and the team’s shareholdings, which are 44%, 30% and 26% respectively.

"Daily Economic News" reporter noted that from 2010 to 2013, PPTV revenue was 14.492 million US dollars, 66.265 million US dollars, 87.778 million US dollars and 110 million US dollars, net profit was -17.407 million US dollars, -648.9 million US dollars, - 708.64 million US dollars and -267.775 million US dollars.

According to the announcement, the main content of the acquisition was Phoenix Media's proposed subscription of 7.32% of the Jiangsu Fund held by Huatai Zijin Investment Co., Ltd. for 371 million yuan. Then Phoenix Media and Jiangsu Jiangsu Soho Holding Group Co., Ltd., which is also a limited partner of Jiangsu Fund, plan to pass a special investment by Jiangsu Fund and wholly own a foreign company, NoblePavilion Ltd., to increase capital by the company to ExaltSpring Holdings Limited, an overseas company holding PPTV equity. After the completion of the capital increase, Phoenix Media indirectly holds approximately 9.56% of the shares in PPTV. It is worth noting that the Suning Holding Group provided a repurchase undertaking. After three years of investment, the company's guaranteed interest rate is 12% per annum.

According to statistics, most of the other video companies in the same category as PPTV have been acquired. PPTV is one of the few influential online video companies. Phoenix Media stated that the company can first act as a financial investor, invest in PPTV to obtain an annual financial investment income of nearly 12%, and then Phoenix Media as a strategic investment will make plans for further strategic cooperation based on the development trend of its business.