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Chinese movie ticketing platform Maoyan is to spend $50 million (HK$390 million) buying a stake in celebrity-backed Chinese production company Huanxi Media. The deal had been indicated by Maoyan at the time of its recent IPO.

Maoyan raised about $250 million when it launched on the Hong Kong Stock Exchange in January. It is now spending a fifth of the proceeds on the stake in Huanxi, which is controlled by directors Xu Zheng and Ning Hao alongside businessman Dong Ping.

According to documents filed by the two companies, Huanxi will issue new shares to Maoyan at a nominal HK$1.6507 per share, giving Maoyan 7.5% of the enlarged company. At that price, Huanxi is valued at $667 million.

The deal gives Maoyan the right to co-invest in Huanxi film and TV projects, and the right to be promotional and distribution partner on Huanxi titles. That is important to Maoyan as it attempts to diversify away from dependence on movie ticket sales.

In return, Huanxi gets to use Maoyan’s platform as an additional shop window for its VOD activities. The documents describe this as a “services entrance on (Maoyan’s) website and an app for (Huanxi’s) new media video contents and services.”

Huanxi has a production slate that includes upcoming movies by leading Chinese-language directing talent including Xu, Ning, Jia Zhangke, Wang Xiaoshuai, Peter Chan Ho-sun and Wong Kar-wai. “One Second,” its first film by veteran Zhang Yimou, was selected to premiere in competition at the recent Berlin Film Festival, but it was withdrawn for “technical reasons” before it could play.