By staff reporter Li Hang

(Caijing.com.cn) Entertainment company Huayi Brothers Media Corp. has won approval from the China Securities Regulatory Commission to raise 620 million yuan through an initial public offering on the Growth Enterprise Board in Shenzhen.

The CSRC made the announcement on its Web site on Sept. 27.

Huayi Brothers will be the first entertainment company to go public on A-share markets. Actors and actresses will be awarded shares during the IPO.

The company said in its draft prospectus it would issue 42 million shares, which would account for 25 percent of its enlarged equity.

Proceeds will be used to fund film and TV drama production, the prospectus said.

China Securities Co. will be the lead underwriter.

Yao Lun, an analyst with Tianxiang Securities, told Caijing that Huayi Brother's IPO price is expected to be above 20 yuan per share, based on average price-earnings ratios of 50 times for other firms planning to list on the GEB.

The company's diluted earnings per share was 0.41 yuan in 2008.

Established in 1994, Huayi Brothers has produced films including "The Forbidden Kingdom," starring Jacky Chan and Jet Li, and "The Banquet," staring Zhang Ziyi.

The company is controlled by brothers Wang Zhongjun and Wang Zhonglei, who own a combined 45.9 percent. Other shareholders include Alibaba owner Jack Ma, with a 10.97 percent stake, and Focus Media chairman Jason Jiang with 4.69 percent.

The company reported first-half net profit of 32 million yuan, up from 68 million yuan in 2008 and 58 million yuan in 2007.

The GEM board is set to open in mid- or late October.

Full article in Chinese: http://www.caijing.com.cn/2009-09-27/110266513.html