CAA said today it is partnering with China’s CMC Capital Partners to form CAA China, and that its new Chinese partner will hold a minority “strategic investment” via a percentage that is not being disclosed. CMC chairman Li Ruigang, a highly regarded executive in both China and the U.S., will join CAA’s Board of Directors as part of the deal.
The agency is looking for the partnership to expand its presence in China beyond its CAA office that was established more than a decade ago. What will CAA China actually be?
“Now we are going to supercharge our efforts, we now have our local partner and have access and to CMC Capital,” CAA president Richard Lovett said in an interview. “The next version will give us the ability to tap into CMC’s resources and talent to take on production as well as talent. The release today announcing the news talks about creating “a wide spectrum of new business and client opportunities in the Chinese market” including everything from endorsements and sports to digital media, music, and original content production.
CAA had been looking for an investor for a long while and we heard that Li had been first talking to China Investment Corp for an equity investment for 10% of the agency for $200M, which would put a valuation on CAA of $2B. However, CIC is a sovereign wealth fund managed by the PROC, and there have been a number of issues — including a tenuous U.S.-China relationship — that have affected investments coming out of China.
Interestingly, competing agency WME | IMG, under the leadership of Ari Emanuel, did a China joint-venture about nine months ago with another venture capital and private equity firm, Sequoia Capital China, and Neil Shen, in which Chinese players Tencent and FountainVest Partners were also part of the investment deal.
“It seems to us that CAA is looking at what WME did in China and trying to compete with that and watermark a value for itself,” one objective third-party expert on China told Deadline.
CMC would not reveal what players were involved, which leads to speculation about whether today’s announcement is an attempt to shake the bushes to bring out investors, or whether there are Chinese partners CMC has brought in to back CAA China. We have seen in the past on Hollywood deals to be announced only based on term sheets before any real money is involved. Regardless, Li is a very, well respected businessman who can usually make things happen.
Li started CMC in 2010 and has invested and operated in the Greater China, North America, Europe and Asian markets, and has created and supported the growth of other entertainment companies. CMC’s previous and current investment and operational portfolio includes Imax China; Star China, China’s top variety production company; and Flagship, a joint venture studio with Warner Bros and City Football Group, a football club management company that owns Manchester City Football Club and New York City Football Club.
Prior to founding CMC, Li was chairman and CEO of Shanghai Media Group over a decade and transformed SMG from a provincial broadcaster into a leading media conglomerate in China.
He has many supporters who do business with Hollywood, not the least of which is CAA’s majority shareholder, TPG Capital who ran point on CMC’s efforts to try to get investors in over the past year or so. “CAA China demonstrates the vision and innovation that has driven CAA’s growth and fueled its ability to stay on the leading edge of industry trends,” said Jim Coulter, co-founder of private equity firm TPG. “CAA has had a significant impact on the Chinese entertainment marketplace by enabling its clients’ success over the past 12 years. We are thrilled with the company’s progress and the value-creation CAA has realized for its shareholders since our investment. With CMC as a meaningfully invested partner, and continuing growth in the Chinese market, the potential for CAA China is limitless.”
CAA is no stranger to the Middle Kingdom; the agency opened an office in Beijing in 2005 and now has about 24 employees. Under the leadership of Jonah Greenberg (who runs CAA’s China efforts in motion pictures), the agency represents some of the top actors, directors, writers, and producers from Mainland China, Taiwan and Hong Kong including Zhang Yimou, Lin Chi-ling, and Donnie Yen. It has also been packaging, selling and raising funds for Chinese-language projects, and the agency says it has “directed more than $400 million in Chinese capital into English-language content” via CAA’s Global Film Finance & Sales Group.
The partnership with CMC, incidentally, also comes after rumblings that CAA client and Middle Kingdom superstar Jackie Chan was looking to begin repping talent in the Middle Kingdom via one of his own many companies. CAA reps Chan in the states but not in China.