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Star Funds in Performance Sector

Posted June. 19, 2007 03:40,   


More and more money is flowing into the entertainment sector. As the growing demand for cultural activities contributes to the expansion of the entertainment market, asset management companies are rushing to make investments in it.

Growing Interest in the Performance Sector-

Golden Bridge Asset Management plans to expand its 68.5 billion won worth of entertainment private equity funds to 120 billion won this year. CJ Asset Management will also keep growing its 98.8 billion won worth entertainment funds. My Asset manages some 60 billion won in entertainment funds.

An executive at Golden Bridge Asset Management said, “As the genres of performance get diverse and are tailored to the tastes of specific age groups, there are more and more potentially profitable markets.”

In particular, after the government decided to give tax benefits to companies who buy tickets for performances, tickets have been sold by the tens of thousands, attracting a large amount of capital.

Investment in the musical sector, which is growing rapidly, is particularly remarkable. The industry estimates the size of the musical market at 100 billion won as of last year.

Following the 12 billion worth of funds it created to invest in the musical “Cirque du Soleil - Quidam” last year, IMM Investment opened another 10 billion worth of entertainment performance funds this year. Capital in various funds has also been invested in the musicals “West Side Story,” “42nd Street” and “Cats.”

TV dramas “Lovers” and “Crazy for Love” aired on SBS received fund investments, while another Korea-China joint venture TV drama produced by MBC and E&B Stars attracted private equity funds.

Most entertainment funds that invest in performances and TV dramas, rather than corporate stocks, are private equity funds in which less than 30 investors are involved. Public funds are also sold during a specific period or stop selling after a target capital amount is raised.

Diversification of Investment Is Needed-

However, some point out that investment in the entertainment sector runs a high risk since it is hard to make a quantitative analysis of the chances of success.

An official at an asset management company said, “The accounting of the performance sector is by nature not clear, so it is hard to analyze profit forecasts,” adding, “Entertainment investment is largely viewed as either smash hit or leads to bankruptcy.”

For this reason, new types of funds are emerging which diversify risks by dividing the investment into dozens of entertainment areas.

CJ Asset Management opened a 24 billion won “CJ VERITAS Movie & Joy” fund last September to invest in 34 movies, musicals and TV dramas. The 10 billion won “Golden Bridge Interpark Performance and Exhibition Fund” of Golden Bridge Asset Management has already invested in 12 entertainment field, and that figure is expected to rise.

A team leader at CJ Asset Management said, “The theory is the same as in the stock market, that diversifying investment is a good idea.”

An executive at My Asset Management also said, “We have come up with effective risk-reducing measures.”

aryssong@donga.com larosa@donga.com