Beijing Fun Age Entertainment Co. Ltd., a film and stage company focused on producing comedies, saw a 44-fold increase in its share value after it launched on China's third national equity exchange about a month ago, as reported by China Daily.
2.84 million shares have been sold at 106 yuan ($16) apiece, according to the statement from Fun Age Entertainment. Each was bought via private placement with 11 investment institutions and individual investors.
The National Equities Exchange and Quotations is also referred to as the New Third Board. It is China's third largest equity market, which is popular for medium, small and micro-sized businesses.
Zhang Chen, chairman of Beijing Fun Age Entertainment, bought 1.52 million shares in the business for 2.4 yuan per share last month, using private placement.
Following a second private placement, the company's estimated value is now at 5 billion yuan, a significant increase from 107 million yuan in January.
"The New Third Board is market-oriented, and so a big price change such as this is normal," said Liu Achang, an investment manager with JD Capital based in Beijing.
Investors in the New Third Board are professional institutions and individuals, according to Liu, who added that their trading has become more mature.
For institutions and individuals to be qualified to invest at the New Third Board, they must each have at least 5 million yuan in investible funds.
Wang Cheng, an investor who has been investing with the New Third Board for two years, said that there is strong investor interest in Fun Age Entertainment, despite its two placements being vastly different.
The company's first film, "Goodbye Mr. Loser," grossed 593 million yuan at the domestic box office during the National Day holiday last year. It achieved this despite having no big stars in the cast.
"The biggest problem for the Third Board is liquidity and early exits by investors," said Wang. "If current participants cannot exit, no new comers will come in."