Harvest, Sun Redrock launch $800m fund to invest in Asian and Western companies and films

The Fund, which will invest in Asia and beyond, will concentrate on three areas of work: mergers and acquisitions (for niche private companies that could grow particularly in the Chinese/Asian markets); operations (building a cross-media distribution platform across Asia); and content (backing films from studios and independent producers).

Media entrepreneur Wu told a press teleconference today that the fund was actively in discussions for film deals and would announce in the next 30 days the first three filmmakers to get investment.

“We are building a financing platform that allows us to invest in globally releasable, primarily English-language films,” Wu added.

The company will also invest in films as a Chinese co-producer, as a way for Western films to be screened outside the quota system that limits the number of non-Chinese films released theatrically in China, and to recoup more of the box-office (44% for co-productions compared to 12-17% for a non-Chinese film). “The co-production rules are becoming fairly relaxed,” he noted.

Wu noted that the types of films that would be most often backed are “tentpoles,” and those with “good human value,” in other words being “socially acceptable” for Asian audiences. He said the fund wouldn’t dictate creative decisions by the producer and director, but would simply not invest in a project that wasn’t deemed to have suitable content.

“The strategic decision we have to make is to team up with a studio [or a producer] for a slate, or pick and choose which ever studio we like to play with project by project. We’ll probably try a bit of both,” he added.

Executives to work with the fund will be announced in coming weeks.

Of the distribution platform, he noted that this would offer Asian and non-Asian content, and also include digital releases streaming online as well as downloads for mobile devices, for instance. It will have a remit beyond China – “Eastern Asian distribution still has a lot of room for growth,” he added. Southeast Asia will also be targeted.

Harvest Alternative Investment Group’s Lindsay Wright noted that the fund would aim for final close of its funding by the third quarter of 2012, and the first investments are likely to be cashflowed in May. She noted that it was still being decided how the fund would be set up, as it could be split into two divisions: mergers and acquisitions and a separate content fund.

When asked why he thought this fund could succeed when others like Legendary East have seen deals fall apart, Wu said: “We’re not a studio. We have a very strong business model, we have very good governance…In this case we’re primarily leveraging Harvest’s strong rescoures in China raising R&D funding. It’s an entirely different ballgame.”

Harvest Seven Stars Media is being advised by Creative Artists Agency’s Beijing office.

Wu and Yang Lan founded Sun Redrock Investment Group in 1999, it is one of China’s largest media and investment companies.

Harvest Fund Management was also founded in 1999 and was one fo the first fund management companies approved by the Chinese government.