MBK Partners and Mirae Asset Securities are weighing a complete withdrawal from CGI Holdings Co., the entity that controls CJ CGV’s cinema operations across China, Indonesia and Vietnam. The potential divestment could trigger a broader exit from these markets for South Korea’s dominant multiplex operator.
The private equity consortium holds a combined 17.58% stake in CGI Holdings up as the second-largest shareholder, positioning them to exercise significant influence over the company’s future. Starting June 19, the investors gain the right to compel CJ CGV, the majority owner, to participate in a joint sale of their shares to external buyers.
Such a forced transaction would likely push CJ CGV toward a complete withdrawal from its three key Asian markets, where the company has struggled with profitability pressures and debt burdens that intensified during the pandemic. CJ CGV has been seeking capital injections exceeding $800 million to shore up its finances after devastating COVID-era losses.
CGI Holdings operates over 270 cinemas and 1,800 screens across the three countries, representing the fourth-largest cinema chain in China, the largest in Vietnam, and the second-largest in Indonesia. The 2019 investment by MBK Partners and Mirae Asset valued CGI Holdings at $986 million, though current market conditions suggest a significantly different valuation.
The timing reflects broader challenges facing international cinema operators in Asia. CJ CGV’s parent company has been pursuing aggressive divestment efforts to tackle debt levels that reached 16.6 trillion won ($14.3 billion). The potential forced sale would mark another retreat by Korean entertainment companies from overseas expansion ambitions that preceded the pandemic.
Investment banking sources indicate that the drag-along rights mechanism, standard in private equity agreements, would give the minority shareholders considerable leverage in determining CGI Holdings’ fate. The outcome could reshape the competitive landscape in Asia’s cinema exhibition market, where international chains have faced mounting pressure from local operators and changing consumer preferences.
For CJ CGV, losing its Asian operations would represent a significant strategic retreat for a company that currently operates 3,412 screens at 455 locations across seven countries. The company would likely focus resources on its dominant South Korean market, where it maintains nearly half of the domestic market share.
