Yesterday, real estate and entertainment conglomerate Dalian Wanda Group announced (in Chinese) that it had sold a 12.77% stake in its film subsidiary, Wanda Film, for RMB 7.8 billion ($1.24 billion dollars). The buyers of the minority stake are e-commerce giant Alibaba and the state-backed Cultural Investment Holdings. Alibaba will be acquiring a 7.66% stake in Wanda Film for RMB 4.68 billion ($744 million), and Cultural Investment Holdings will be paying RMB 3.12 billion ($496 million) for 5.11%.

The acquisition will make Alibaba the second-largest shareholder of Wanda’s film group, with Wanda still controlling a 48.1% stake in the company.

The deal comes as less a surprise as Wanda has, since last year, been undergoing a series of asset trimming as a response to the Chinese government’s calls for private companies to reduce leverage and decrease risk in the overall economy. Last August, an opinion piece published by China’s state media The People’s Daily excoriated (in Chinese) companies like Wanda and LeEco for using cheap debt to “barbarically expand” their business empires. A slew of measures were issued by the government to curb what was perceived as “irrational spending,” including a notice (in Chinese) by the National Development and Reform Commission and the State Council that outlawed investments in certain sectors—like the gambling and sex industries—and restricted investments in industries like film, entertainment, real estate, and sports.

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Pang-Chieh Ho

Pang-Chieh Ho is currently an editor at Digg and a columnist for SupChina. She previously worked at China Film Insider as a newsletter editor and her work has appeared on Screen Comment and VCinema.