Buyout firm snaps up HMV Hong Kong for a song
Hong Kong-based buyout firm focusing on the entertainment buys HMV's businesses in Hong Kong and Singapore
AID Partners Capital, a Hong Kong-based buyout firm focusing on the entertainment and media industry, has bought HMV's businesses in Hong Kong and Singapore as well as operating licences for mainland China.
The British music retail chain entered administration in January but unlike its struggling operations in Britain, HMV's Hong Kong and Singapore businesses are "debt-free" and "profit-making", even as consumers shift to buying online and the company faces rising rents, according to AID.
HMV sells CDs, DVDs and other merchandise at its six stores in Hong Kong and two shops in Singapore.
"HMV's distribution channels are located in prime locations, have good reputations, and a loyal customer base, providing an appealing buying opportunity for us," AID partner Kelvin Wu said. Wu said "HMV needs the money" even though both operations were healthy.
AID did not say how much it paid but the price is believed to be much less than that paid by retail restructuring specialist Hilco to acquire HMV in Britain. HMV Hong Kong and Singapore are separate from the troubled British unit. Hilco, which owns HMV Canada, bought HMV's £176 million (HK$2.07 billion) debt from its administrators for a reported £40 million in late January after the music chain said it appointed administrators to oversee the sale or closure of the business.
Wu said his experience turning around Hong Kong-listed film production and cinema operator Orange Sky Golden Harvest Entertainment gave him the confidence and experience to lead the music chain. A former chief executive of Golden Harvest, Wu brought the once cash-strapped company back to profit and raised HK$600 million through a share placement.
Emily Butt, the managing director of HMV Hong Kong and Singapore, said customers in Asia remained relatively loyal to physical shops, delivering growth opportunity despite online shopping and digital downloads, such as the launch of iTunes in Asia last year.
HMV Hong Kong and Singapore posted combined annual revenue of HK$300 million, with music sales accounting for 28 per cent and visual products 41 per cent, while non-music items, including electronics and video games, made up 24 per cent.