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Wanda to list sports unit in US ahead of Beijing Olympics

Conglomerate focuses on 'asset-light' business after years of ballooning debt

NEW YORK -- Chinese conglomerate Dalian Wanda Group has filed to list its sports media and events unit on Nasdaq, with an eye on the 2022 Beijing Winter Olympics and a growing sports fan base at home.

Wanda Sports Group's initial public offering will raise up to $500 million, according to a preliminary prospectus filed Friday with the U.S. Securities and Exchange Commission.

"Future China market growth will mainly be driven by a growing fan base, the Beijing 2022 Winter Olympic Games, and further government investments and initiatives," Wanda Sports said in its prospectus.

These "government initiatives" are likely to be spearheaded by President Xi Jinping, who is known to be an avid soccer and basketball fan.

The listing is in line with Wanda's shift to an "asset-light" model. Wanda Sports generates revenues from sporting events and rights, as well as other sports-related services, as opposed to Wanda's traditional asset-heavy investments in shopping malls, amusement parks and hotels.

Like many Chinese conglomerates, Wanda was on a buying spree until a couple of years ago. It borrowed heavily to snap up on the order of $20 billion in domestic and overseas assets. Its debt ballooned past 200 billion yuan (nearly $30 billion) at one point.

The group began unloading equity last year to deleverage, selling off at least $19 billion in assets. These included part of its stake in American cinema chain AMC Entertainment, as well as a stake in Alibaba Group Holding. Wanda also shed many hotel and theme park properties.

Dalian Wanda is determined to transform into an "asset-light" company with a steady cash flow and lower leverage, founder and Chairman Wang Jianlin has said. Proceeds from Wanda Sports' U.S. listing will go toward debt repayment, according to its prospectus.

Over 95% of the sports unit's revenue in 2018 came from outside China, Wang said in a work report posted on Wanda's website this January. Wanda Sports' prospectus said the unit intends to grow its presence in the Chinese sports media and events market, which it expects to grow to about $10 billion by 2022.

The unit's principal shareholder is Wanda Culture. Cultural businesses became the largest contributor to the group's revenue in 2018, at about 32.3% of the total, Wang said in the work report.

The rise of Wanda Culture, which also includes its Shenzhen-listed movie theater unit, marks an important milestone in the group's pivot from real estate, he said.

Wanda Sports lost nearly $10 million for the first three months of 2019 on revenue of $276 million, according to the prospectus. Switzerland-based sports marketing company Infront Sports & Media and World Triathlon Corp. are wholly owned subsidiaries.

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