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HONG KONG—IMAX Corp.'s China division plans to raise up to US$276 million in a Hong Kong initial public offering, as the company aims to expand in one of its biggest growth markets.

The potential deal would provide a test of investor sentiment in the IPO market after a quiet third quarter. Hong Kong's Hang Seng Index has fallen 17% since July, as market turmoil on the mainland hurt investor demand.

The volatility of Chinese stock markets have caused several listing candidates to scrap or postpone their listing plans in recent weeks. Last week, Hong Kong Airlines International Holdings Ltd., a domestic short-haul carrier, indefinitely called off its planned US$500 million listing, while China's top domestic investment bank, China International Capital Corp., or CICC, and China Huarong Asset Management Co., one of the country's largest buyers of bad loans, put off their up to US$4 billion IPOs to the fourth quarter, according to people have direct knowledge of the deals.

IMAX China Holding Inc. plans to start taking orders from investors on Tuesday and to list on Hong Kong's stock exchange on Oct. 8, according to a term sheet seen by The Wall Street Journal.

The company and four major shareholders including IMAX Corp. and private-equity firms China Media Capital and FountainVest Partners are selling a combined 62 million shares—or about 17% of the firm's shares outstanding—at an indicative price range 29.80 Hong Kong dollars to HK$34.50 a share (US$3.85 to US$4.45), the document said.

China Media Capital has been actively investing in the country's booming film market. On Sunday, the state-backed investment fund struck a deal with Time Warner Inc.'s Warner Bros. to make Chinese-language films. Deals with local studios also look appealing to foreign filmmakers because China still restricts the number of foreign movies that can be shown in Chinese theaters.

Li Ruigang, 46 years old, is the founder of China Media Capital and chairman of state-owned media company Shanghai Media Group. With the help of Mr. Li's network, IMAX grew to have 251 theater systems in the country at the end of June.

The planned Hong Kong listing by the company, which brought its giant movie screens to China in 1998, comes as China's film industry continues to grow despite China's economic slowdown. Earlier this month, state media said Chinese movie theaters had taken in 30 billion yuan ($4.71 billion) in ticket sales so far this year, surpassing the 29.6 billion yuan that they took in for all of 2014.

The IPO proceeds will be used mainly to procure IMAX theater systems and expand revenue-sharing arrangements, the term sheet said.

In China, IMAX's top customer is Wanda Cinema, the theater unit of conglomerate Dalian Wanda Group. Controlled by Wang Jianlin, China's wealthiest man, Dalian Wanda bought AMC Entertainment Holdings in a US$2.6 billion deal three years ago. The company took Wanda Cinema public in a US$209 million Shenzhen IPO in January.

Wanda Cinema had 117 IMAX screens in its 167 theaters as of last year, many of which are housed in large shopping malls.

Write to Yvonne Lee at yvonne.lee@wsj.com

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(END) Dow Jones Newswires

September 22, 2015 00:55 ET (04:55 GMT)

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