Chinese content distributor gets a Korean investor

Netflix-like content distributor raised $324 million and set the timeline to list in Hong Kong next year.

Zhejiang Panshi Information Technology, a Chinese digital content distributor based in Hangzhou, announced Wednesday that it received Rmb2.25 billion ($324 million) from its series D round of fundraising from a group of investors including South Korea’s Hana Financial Group.

The latest funding round was led by Cybernaut Investment Group, an existing investor in its previous funding round, the company said in a statement.

China Construction Bank’s trust fund also invested alongside Hana Financial, one of South Korea’s four biggest financial institutions.

Panshi said its post-deal valuation is over $1.5 billion after this round of investment, up from $490 million previously.

Despite little known among international investors, Panshi is one of China’s top three advertisement distributors alongside Alibaba and Baidu’s advertisement distribution platform. It also provides digital subscription services for films, games, videos and other online content.

In addition to the fundraising, Panshi also announced plans to go public in Hong Kong next year and expected its net revenue to reach Rmb600 million by the end of next year.

Panshi was listed in China’s National Equities Exchange and Quotations (NEEQ) in 2015. In December 2016, Panshi announced a Series C fundraising, collecting $107 million by issuing 6.2 million shares to a group of investors.  

The company delisted from NEEQ in September 2017. Net profit quadrupled in the first half last year to Rmb58 million on a year-on-year basis, a remarkable increase that company attributed to a surge in overseas advertisement distribution.  

China’s Netflix

The core business of Panshi is content distribution. About 70% of its revenue comes from overseas distribution channel, especially emerging markets in Asia, Africa and Latin America.

Panshi purchases music, videos and other digital content in over 30 countries and collaborates with Facebook, Google Play and Amazon Affiliate to distribute its content overseas.

The company said it aims to increase its annual net profit to Rmb2 billion in five years and compete with Netflix as content distributor.

Hana Financial’ s commitment to the Chinese firm is very much a rare case in recent years.

South Korea’s investment into China has fallen drastically since 2016 after the two countries were embroiled in the dispute over the deployment of the THAAD anti-missile defense system in Korea. Direct Investment from South Korea reduced 19.4% last year on a year-on-year basis, according to China's Ministry of Commerce.

The largest and perhaps the only major South Korean corporate investment in China in recent years was SK Holdings’ W374 billion ($333 million) purchase of a 10% stake in ESR, a Shanghai-based warehouse operator.

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