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HONG KONG – Huayi Brothers Media, already the biggest private-sector film studio in China, is to move to another level. It unveiled a huge fund raising exercise and twin strategic alliances with Internet giants Alibaba and Tencent.

Huayi is to raise RMB3.6 billion ($590 million) through a private placing of new shares with Alibaba, Tencent, Ping An Asset Management, CITIC Securities.

Following the deal Alibaba and Tencent, will each own just over 8% of Huayi’s share capital. Both are subject to a lock up agreement spanning 30 months.

The share sale gives Huayi further capital for expansion. More significantly, it also cements an investment alliance behind Huayi involving three of the most powerful companies in China.

With Alibaba, Huayi has additionally struck a wide-ranging deal spanning e-commerce, online entertainment and movie development.

On the production side, Alibaba is looking to distribute 5 films with Huayi in the next 3 years. Alibaba will invest from 5%-10% into Huayi films. In terms of promotion, the two will jointly select 10 Huayi films and work with Alibaba’s Entertainment Platform.

Huayi and Alibaba will co-operate in online ticketing through Alibaba’s Taobao market, allowing consumers to make advance purchases of theatre tickets for Huayi films. And Huayi will ensure that all products related to the films — music, games, books related to the film — will be sold on Alibaba platforms first.

The agreement with Tencent, gives the social media giant a first look deal allowing it to cooperate with Huayi on games, publishing products and comic books, but excluding feature movies. If Tencent chooses to expand into TV series production, with titles based on its games or publishing products, Huayi will similarly have first look rights. Huayi has also agreed to allow Tencent to invest 5-10% in its films.
 
Co-chairmen James and Dennis Wang said the linked deals will make Huayi “the leading entertainment power in China.”