Alibaba fluffs first rule of being a movie villain

Hong Kong

WHEN villains in movies torture the hero, they usually give a lengthy account of their elaborate plans. Investors in Alibaba Pictures get no such thing. The film-making unit of China's biggest e-commerce group is raising HK$12.2 billion (S$2.12 billion), diluting existing holders and leaving the company effectively a loss-making cash shell. Shareholder value gets only a walk-on role.

Since Alibaba bought its controlling stake in what is now Alibaba Pictures last March, it has snipped, restructured, written down assets and raised new funds. While cameras are now rolling on some big productions, the company is mostly a pile of cash. After placing new shares equivalent to a fifth of its current equity base, the group's acquisition war chest will account for more than 90 per cent of pro-forma assets of US$2.6 billion. The market currently values those assets at around four times face value.