Singapore builds up private cash stash

Entertainment industry growth set as priority

HONG KONG — Singapore has set out its stall as a center of finance for the entertainment industry in Asia, mixing a generous supply of soft-money options with a largely favorable regulatory environment. Now being added into the mix is a series of funds run by private-sector operators.

In capital market matters, the territory often has played second fiddle to Hong Kong, but Singapore has generally outpaced its Asian rival in the fund-management and investment-trust industry. So the development of specialty funds for an industry that has been set as a national-priority growth area seems a natural extension of that process.

The government sees long-term benefits to development of the country as an entertainment hub through the “halo effect” and a trickle down of skills; hence its promotional campaign reads “made by Singapore” rather than “made in Singapore.”

Its ubiquitous Media Development Authority has taken the initiative by courting companies from around the region to consider setting up their funds in Singapore and by greasing the wheels behind the scenes.

The MDA, which through the Singapore Film Commission also provides financial support for individual film projects that are actually made in Singapore, is understood to have invested coin of its own as equity in some of the new private funds, though the quantity of this seed capital is unclear.

“There is now some S$500 ($385 million) available for film, TV and games development across 13 funds based in Singapore,” MDA boss Christopher Chia said in May. That was before the completion of a $400 million pool of coin opened up by RGM, a talent manager turned producer, and before the current global financial meltdown.

“The Economic Development Board and the MDA are very generous in their approach to companies that have an interest in Asia. And they are very flexible in the way they allow you to structure the funds,” says Ashok Amritraj, topper of Los Angeles-based Hyde Park Entertainment. “They have made Singapore a safe, clear haven in these crazy times.”

Hyde Park, which is reinventing itself as an Asian-American firm, is most of the way toward putting together a $70 million fund based in Singapore. Amritraj doesn’t break down the fund’s split between equity and debt, but he says capital came principally from the MDA and investors based in the Middle East and Singapore.

The fund grew out of an extension of the production relationships Hyde Park already enjoys in India and other parts of Asia, with a goal of backing three or four movies per year including Hollywood and cross-cultural pictures aimed at global markets. In the first quarter of 2009, it is expected to open a development and production boutique in the city-state.

RGM’s coin operation

Already under way is a fund operated by RGM Entertainment, the Australian talent management agency. The company shifted its seat to Singapore in 2005 to provide executive production, packaging and talent management within Asia.

The four-year revolving fund, which company topper Devesh Chetty describes as a $400 million facility, continues that effort and considerably ups RGM’s firepower.

The fund’s focus will typically be on movies with an Asian connection, albeit lensed in English and with a U.S. distribution deal of some sort in place. Budgets will be large by Asian standards — $15 million is the minimum — though this is a segment that is growing.

Chetty says that producing 10 $40 million pictures would be ideal, and that “Point Break 2,” which Jan De Bont will shoot in Indonesia, is the best example of the company’s philosophy.

“The benefits of operating this fund are that we can (finance) pre-production where other movies have to wait for bank finance; we can greenlight with a minimum of presales; our U.S. deals don’t have to be (minimum guarantee deals), they can be P&A deals; and we can use all the variants on the independent finance model — presales, gap, mezzanine and equity,” Chetty says.

He estimates that 90% of the movies will lense in Asia, and he says RGM is moving toward greenlighting a trio of pics inside the next three months.

Another Singapore arrival this year was Japan’s Entertainment Farm, a well-established arthouse shingle (“The Namesake”) that in April started raising $30 million-$50 million in Singapore for projects brought in by producer Yukie Kito. Fund gives the parent company the ability to fully finance smaller films or take minority stakes in larger projects costing up to $10 million.

“This is a new way of working for a Japanese company, and we are keeping the amount raised modest as we want to raise it quickly; we have projects waiting for finance,” says Yano Satoru, director of Entertainment Farm Pte. Ltd., who adds it has no debt component or leverage.

Singapore also boasts two sovereign wealth funds: the Government of Singapore Investment Corp. (GIC) and Temasek. Temasek has become a media investor, taking a stake in Indian broadcaster INX Media, and is reportedly eyeing an investment in satcaster Tata Sky, alongside News Corp. and Indian conglom Tata.

A layer of fog has recently obscured clear vision of all funds that rely on debt components, or matching their film investment with bank borrowings, and Singapore’s film funds are no exception. “The world will return to normality 90 days after the financial markets achieve stability,” one financial sage says. “But quite when stability will return is anyone’s guess.”

But when normality does return, Singapore will again be able to make a case as a hub for film financing.

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