If there’s any sign that China’s game market is frothy, this is it. The film company Huayi Brothers Media Corp. has invested $288 million for a 20 percent stake in China’s Hero Entertainment mobile game company.

Hero Entertainment debuted in June 2015 from founder Shuling Ying. Investors at the time included venture capital firms Sequoia Capital and ZhenFund, in addition to Huasheng Capital, a fund put together by China Renaissance Partners. Hero Entertainment is listed as a public company on the NEEQ over-the-counter stock exchange in China. Hero Entertainment is mainly engaged in the development and management of esports game products as well as organizing and promoting mobile esports competitions.

Hero’s chief financial officer, Huang Shengli, is formerly managing director of China Renaissance Partners. He has helped companies like Didi Chuxing raised more than $800 million on private financing. Ying was previously the chief operating officer of China Mobile Games and Entertainment (CMGE), which has become one of China’s largest mobile game companies.

Huayi Brothers is now the second-largest shareholder in Hero Entertainment. The deal values Hero Entertainment at 19 times its estimated net profit for 2016. That’s far more valuable than Western game companies in terms of a comparison. Huayi Brothers Media acquired 27,721,886 shares of Hero Entertainment (representing about 20 per cent after the capital injection) for 1.9 billion yuan. For the three-year ending December 31, 2018, Hero Entertainment is targeting after-tax net profit of more than 1.82 billion yuan.

Hero Entertainment is the organizer of Hero Pro League(HPL), one of the most popular mobile esports tournaments in China, but also the sponsor of the Ying Xiong Lian Meng or Heroes Alliance, a China-wide mobile esports games association.

Other investors include Huaxing Fund, Chinese real estate tycoon Wang Jianlin’s son Wang Sicong, and Tianjin Dinuo Investment Management.

Under the terms of the agreement, Huayi Brothers has been granted right of first refusal in terms of adapting any of the esports games developed or managed by Hero Entertainment into films, TV series, web series or other media form, at the fair price and on equal terms. Meanwhile, Huayi Brothers’ subsidiary Huayi Brothers (Tianjin) Interactive Entertainment can consider Hero Entertainment as the partner of choice for the joint development of any esports games within its interactive environment.

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