Investing in the spotlight

Head of Chinese venture capital company with UK presence says theatrical productions offer opportunity to combine profit and enjoyment

When the Broadway musical 42nd Street came to London in March, Johnny Hon, chairman of the Chinese venture capital company Global Group, sat near the Duchess of Cambridge in the royal box for the opening-night performance.

The event is the latest in a series of highlights for Hon, who established Global Group in Hong Kong in 1997 and now employs around 150 people, predominantly in China and the United Kingdom.

Global Group is a co-investor in the 42nd Street production, alongside Gate Ventures, a London-based media and entertainment investment company.

First staged on New York's Broadway in 1980, 42nd Street is already familiar to many British viewers, since it was staged in London for five consecutive years starting in 1984. The 2017 revival version in London is directed by US director Mark Bramble, and it stars the Scottish Grammy award-winning singer Sheena Easton.

"I take care of the show's finances, and I leave the creative part to the experts," Hon says inside central London's Hotel Cafe Royal, where he always stays on his London trips, not far from Brook Street, where Global Group's London subsidiary is based.

Hon said that investing in theatrical productions combines profit and enjoyment. Global Group has not disclosed the amount it invested in 42nd Street, but Gate Ventures' chief strategy officer Michael Linnit has previously mentioned that the show was a multimillion-pound commitment for investors.

Hon's ability to invite the Duchess of Cambridge as a special guest was because Global Group and Gate Ventures were making a donation to East Anglia Children's Hospices, a charity the duchess supports. The producer's donation will be used to build a new hospice in Norfolk.

Hon is hesitant to disclose profitability on specific productions, but says Global Group's overall profitability over the past 20 years has been good. In 1997, Hon established the company with a modest sum of capital from his own savings as an asset base to make investments, and now this asset base has grown to around ￡100 million ($134 million; 113 million euros).

Theater and entertainment is a focus for Global Group. Besides 42nd Street, the company's other wellknown investments include the 2016 London musical Sunset Boulevard, the 2008 Oliver Stone-directed Hollywood film W., and the 2007 Derek Yee-directed Hong Kong crime drama Protege.

Hon, born in 1971 in Hong Kong, arrived in the UK at the age of 12 to study at Uppingham School, before attending King's College London and Cambridge University. He began his career at the Hong Kong subsidiary of the Dutch bank ABN AMRO, an experience that equipped him with finance background and income, which he then used as capital to start up his own venture capital company, Global Group.

Hon established a London subsidiary for Global Group that same year, so that the China and UK teams could work together to spot investment opportunities in both markets and create synergies by helping its portfolio companies to expand into each other's markets.

Perhaps his array of experience and wide range of interests have given him insight into many early-stage industry trends, which he sees as a skill crucial to his profitable investments.

Hon, having already achieved success in the entertainment industry, is now leading a strategic shift for Global Group by finding new investment opportunities in the financial technology and biotechnology sectors.

Hon estimates that the company has invested in hundreds of companies and businesses, mainly early-stage companies that have both higher risk and higher returns than average.

Not all investments end up being profitable, he concedes. Out of all Global Group's investments, only one-fifth become profitable. "Those that become profitable could generate very high returns, and even the investments that fail, I gain something from them," he says.

One not-so-successful project he remembers vividly is his first investment soon after setting up the business.

Geoff Morrow, a London-based songwriter, wanted to open a restaurant in London with music playing in the background. So when Morrow came to Global Group for capital, Hon made a bet on the project's success.

"The idea was great. Originally, we were going to try it out in China, too, after it found success in London, but it didn't work out. But what I really got from it was a great friendship with Geoff Morrow, which has been great over the years," he says.

The friendship did eventually turn into business collaboration, with Morrow becoming CEO of Gate Ventures in 2015, when the company was established. In the same year, Morrow invited Hon to become the executive chairman for Gate Ventures, a post that Hon accepted.

Since becoming executive chairman of Gate Ventures in August 2015, Hon has helped it to raise more than 20 million euros ($23.7 million; ￡17.7 million) of investment by pitching the opportunity to his network of private investors. In 2016, he led the company's listing onto Nasdaq First North, the European small-business arm of the US stock exchange Nasdaq.

It is his friendship with Morrow and the crucial role he played to help Gate Ventures grow that led to Global Group and Gate Ventures' ability to co-invest in theater productions such as 42nd Street and Sunset Boulevard.

Hon, who recently left his post as Gate Ventures' executive chairman, says it was a choice he made to focus on his other business activities. He says he will act as a consultant to support the company in its transition period.

Meanwhile, at Global Group, Hon has ambitious ideas to invest in new trends in the entertainment sector, especially those that capture emerging opportunities in China's fast-growing entertainment and consumer markets.

Last month, Global Group announced that it was co-investing with Beijing-based Dadi Century Films (Beijing) Co and Hong Kong-based Mei Ah Film Production Co to create a crime thriller film, Theory of Ambitions, starring Chinese actors Tony Leung and Aaron Kwok. It is scheduled for global release at the end of 2018. Global Group is making this investment through its wholly owned subsidiary, Global Group Films.

"The film market in China is booming. The number and quality of films produced in China has improved significantly," Hon says, adding that the group is also keen to introduce good Chinese films to the international market.

Separately, Hon is working on new ideas to capitalize on China's massive consumer and outbound tourism markets through new technical innovation in the entertainment area.

One of his ideas is to fund a Chinese reality show that hosts the first episode in China, and subsequent episodes in popular international tourism spots, to encourage further Chinese outbound travel to these destinations. The aim is to generate additional revenue as a result of partnerships with international tourism destinations.

His other idea is to fund films that viewers can watch in "shopping mode", meaning that viewers, while watching a film, can purchase products they see on the screen at the touch of a button.

cecily.liu@mail.chinadailyuk.com

(China Daily European Weekly 12/22/2017 page30)