Alibaba Group Holding Ltd (NYSE:BABA) Makes Significant Investment In Beijing Enlight Media Co Ltd

A significant investment has been made by e-commerce company Alibaba Group Holding Ltd (NYSE:BABA) in Beijing Enlight Media Co Ltd, an entertainment company. This company in known for producing relatively low budget films such as box office it “lost in Thailand”. The Chinese giant has invested a huge $382.7 million in the Chinese film and television programme producer.

Why are analyst so optimistic about BABA?

This move was made by Alibaba as it continues its bid to expand its entertainment portfolio. This significant investment was made by Alibaba’s Venture Capital Unit, Hangzhou Ali Venture Capital. Bought in a private placement, the move sees the company buying shares of enlightenment media at 24.22 yuan each. This strategic move comes on the heels of Alibaba Group Holding Ltd (NYSE:BABA)’s attempt to tap into China’s fast-blooming entertainment market by handsomely investing in its online video sector.

The reasoning behind this bold action by Alibaba is the fact that forecast consultancy agency iReach has predicted that the sector will surpass 90 billion yuan by 2008. This figure will represent an increase of 24 million Yuan to 800 million up from the realatively modest 776 million Yuan it presently is. . This move is a replica of the move made by the company just last year when it invested 800 million yuan in Chinese company ChinaVision Media Group. The move not only saw Alibaba acquiring majority stake in this company, but also saw the company undergo a name change. Specializing in film, the company was subsequently renamed Alibaba Pictures Group.

Information revealed in Enlight Media’s unaudited company papers shows that the company has enjoyed success financially in the past year. According to the company’s filings its revenue was in excess of 1.2 billion yuan and made a profit of 407 million yuan. This promising news only highlights the company’s potential to grow, and is a great piece of business by Alibaba.

About the Author

Michael joined US Markets Daily in 2009 and is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments.

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