Aladdin looking to Nasdaq for US$150m
Frederick Yeung, Tim LeeMaster and Sherman So
Outdoor media firm plans nationwide push
Aladdin Media Holdings, one of the mainland's largest outdoor media firms specialising in public billboard advertisements, plans to raise up to US$150 million from an initial public offering on the Nasdaq later this year to fund expansion, according to the company's founder and chief executive, Melvin Chung.
AMH's proposed capital raising will follow a US$30 million private equity injection into the group completed last week by Credit Suisse Private Equity Asia, AIF Capital and OSK Ventures.
The Shanghai-based company is competing in the crowded outdoor advertising sector on the mainland.
Unlike its listed competitors, which generate rental income by reselling outdoor advertising space through short-term rental agreements on government-owned outdoor assets, Aladdin is licensed to construct and operate public service billboards.
It has now accumulated a portfolio of such outdoor assets in Shanghai, Shenzhen, Wuxi, Chongqing and Wuhan, and targets to extensively expand its network coverage. 'Our goal is to establish a nationwide platform covering over 30 cities in China, in which each city will have over 1,000 billboards,' Mr Chung said.
'We have secured the licence to build the public service platforms in all cities in China. It's an exclusive right awarded by the central government.
'However, what we now need to do is to negotiate with various local governments to reach a deal to install such billboards on their streets,' Mr Chung said.
Under the licensing agreement, the government will use one side of the billboards for public announcements, or to advertise public services, while the other side will be available to advertisers.
AMH then pays 5 per cent of revenue generated from the advertising contracts as a sales tax to the government to secure its exclusive rights.
Mr Chung said since the government was trying to restrict illegal billboards or 'street furniture', Aladdin would be in an advantageous position to establish advertising platforms on a nationwide basis to create a wide network for advertisers.
He expects the company to grow as much as 80 per cent a year over the next three to five years and plans to expand into electronic billboard advertising.
The largest player in the mainland's outdoor advertising sector is Tulip Mega Media, a specialist in outdoor advertising using large LED screens.
It says it owns 10,000 square metres of advertising screens in 12 cities and has about 80 per cent share of outdoor advertising revenues.
However, an analyst with Beijing-based market research company Analysys, Chandler Gao, said he expected Tulip's dominant market share to fall as new players entered the market.
'The industry has been growing fast in China over the past two years partly because the government has been tearing down many traditional billboards in major cities, in order to clean up for the 2008 Beijing Olympic,' said Mr Gao.
Licence to bill
The firm is licensed to construct and operate public service billboards
The proposed capital raising will follow last week's private equity injection into the advertising company of, in US$: $30m