Alibaba Pictures' share price has dropped over eight per cent on the Hong Kong Stock Exchange as it announced a massive share sale expected to raise at least HK$12.1bn ($1.6bn/£1.2bn).
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The company is a separately traded unit of the New York-listed ecommerce giant Alibaba, formed last year when Alibaba acquired a majority stake in China Vision Media Group.
It is now poised to for a huge sale of 4.2bn shares priced at HK$2.90 - representing a 20 per cent discount on Monday's closing price of $3.60 - which it says will raise money for "general working capital purposes and to finance potential acquisitions arising out of media related investment opportunities".
Shares in the business have risen over 160 per cent this year, as its parent company Alibaba said it was considering transferring a number of its media technologies to the Hong Kong-listed company.
Investors also hope that the company can be a major force in the lucrative Chinese movie industry, which hit Rmb29.6bn ($4.8bn) in 2014 making it the world's second-largest movie territory.
As part of its expansion, Alibaba Pictures also announced on Tuesday that it was to buy Yueke Software Engineering for Rmb830 ($134m), an online movie ticketing platform.