AID Partners buys HMV's Asia operations(2)

The firm sees life in the entertainment products retailer despite strong competition from digital streaming, online retailers and piracy.

Hong Kong-based AID Partners has bought the Singapore and Hong Kong operations of entertainment retailer HMV from the UK parent company HMV Group, according to a statement. 

The firm bought out the operations and also injected new capital, but financial details were not disclosed.

In the UK, HMV Group went into insolvency in January and is in the process of closing about 100 stories nationwide. HMV Group was slow to react to the decline of CDs and DVDs and the uptake in online delivery of music and movies.

In Asia, HMV sells CDs, DVDs, games, entertainment hardware and accessories and it intends to emphasise becoming an “all around entertainment” retail business, according to Emily Butt, managing director of HMV Hong Kong and Singapore.

HMV’s Hong Kong and Singapore operations are profitable and have an aggregate annual turnover of roughly $38 million, according to Kelvin Wu, founding partner of AID.

“Home entertainment products still sell strongly in Hong Kong, Korea and Taiwan,” Wu said. 

The firm also believes the market for CDs and DVDs has remaining potential in Asia. “We don’t think this market is gone,” he said. 

Wu said the acquisition is not a financial engineering deal. The firm intends to work with HMV management and expects to announce a new strategy shortly. AID also bought the license to expand HMV into China, Taiwan and Macau and a key focus will be expansion into the PRC, though he did not provide details.

HMV will have to compete against online retailers and deal with the challenge of piracy, which is widespread in China. However, Wu believes the situation is gradually improving. “As Chinese consumers become affluent, the mentality is shifting from piracy to [a recognition of] protecting IP.”

AID Partners was founded in 2007 by Kelvin Wu and Joel Chang, who have experience in investment banking in Asia. It invests in buyout opportunities and expansion capital primarily in media and entertainment, retail, and consumer sectors. The firm closed its first fund in 2007 and is raising a second fund.

AID’s portfolio includes Orange Sky Golden Harvest Entertainment, a large movie theatre operator in Asia and Legendary Entertainment, a Hollywood film production company that co-produced several high-grossing movies such as the Batman trilogy.