Li Ruigang's investment logic: Make in-depth layout of upstream and downstream around the industry

Looking at Li Ruigang's investment landscape, in addition to sports business, his Chinese Cultural Industry Investment Fund and Chinese Cultural Holdings have layout in the fields of film and television, media, smart TV, technology, music, etc., and some fields have basically formed a top-to-bottom. The entire industry chain.

Original title: Li Ruigang's 10 billion investment map

Although Li Ruigang's Chinese Cultural Holdings is so low-key that it does not even have an official website, every move has attracted the attention of the industry. On March 16, Chinese Culture Holdings took over part of the shares of the Shanghai Men's Basketball Team. On March 13, Chinese Culture Holdings and Sequoia Capital established a special sports fund. Two sports investments in three days have made Chinese Cultural Holdings the focus of the industry. Looking at Li Ruigang's investment landscape, in addition to sports business, his Chinese Cultural Industry Investment Fund and Chinese Cultural Holdings have layout in the fields of film and television, media, smart TV, technology, music, etc., and some fields have basically formed a top-to-bottom. The entire industry chain. However, long-term investment also carries certain risks. Li Ruigang also said that he would do some sorting out the companies he invested in the past and did not rule out the possibility of reducing or withdrawing some companies.

Layout sports is only the tip of the iceberg

. In the past two years, Li Ruigang's successive layouts in the sports field have gradually emerged his sports landscape. Data shows that in December 2015, Chinese Culture Holdings and CITIC Capital jointly invested in the City Football Group, which owns four football clubs, for US$400 million. Sports Sports Power, a subsidiary of the Chinese Cultural Industry Investment Fund, bought the Super League for five years for a sky-high price of 8 billion yuan. Copyright. In addition, in terms of sports brokerage, sports event operations, sports venues, media, and sports data, Li Ruigang has also invested in companies such as Shengli Family, Suoford Sports, Lanxiong Sports, and Hiqiu Technology.

However, compared with the sports industry, Li Ruigang has an earlier layout in the film and television industry. Investing in Star Media in 2010 was the first investment of the Chinese Cultural Industry Investment Fund. Since then, the Chinese Cultural Industry Investment Fund has successively cooperated with Hollywood company DreamWorks to establish Oriental DreamWorks, and jointly invested with Warner Bros. to establish flagship film industry, entered TVB, and invested in Gravity Film and Television. Small and medium-sized film companies such as film and television have deployed their layout on the film and television content side. In terms of ticketing, film special effects, and artist brokerage, Li Ruigang also participated in investing in entertainment ticket, Guevara, IMAX China, Base FX, Lehua Entertainment, Siba Media and other companies. In addition to theaters, Li Ruigang's film and television layout basically involves the entire upstream and downstream chain of the film industry.

Focusing on sports, film and television and other businesses, Li Ruigang also invests in Lego Park, Cityneon, Fast Hand, Micro Whale VR, NEXT VR and other companies in theme parks, technology, Short Video and other fields, in order to expand profits and monetization channels for high-quality upstream content. In addition, Li Ruigang has also invested in various fields such as e-commerce, video websites, performing arts, and media. While Chinese Cultural Holdings has three major shareholders, Alibaba, Tencent and Yuanhe Holdings, and coupled with the tens of billions of yuan of funds under the Chinese Cultural Industry Investment Fund, Li Ruigang obviously has sufficient capital chain support.

Dispersed projects form a mutually beneficial closed loop.

Unlike domestic industrial funds that focus on financial investment to obtain short-term returns, Li Ruigang prefers long-term strategic investment, obtaining the best quality content resources through investment and in-depth operations, and then relies on various online and offline channels to expand profit and monetization channels, and form a layout of the entire industry chain. Taking the film and television field as an example, the film "Megalodon Shark", which will be released in 2018, is full of members of Gravity Films and Flagship Films under the Chinese Cultural Industry Investment Fund. As a Sino-foreign cooperation project, Gravity Films was the first to contact the film project and later introduced the flagship film industry., and use the superior resources of the flagship film industry to layout the production and distribution of films. In the sports industry, as of now, Li Ruigang's investment layout has covered event copyright development, content production, media operations, event and event management, venue management, athlete brokerage, sports marketing, data services and other aspects, basically covering all aspects of the sports field. level.

As Li Ruigang's investment territory continues to expand, subtle chemical reactions have also formed between his companies. The Micro Whale Technology founded by Li Ruigang has reached in-depth cooperation with Manchester City Football Club. At the same time, Micro Whale VR, a subsidiary of Micro Whale Technology, will also work with Sports Olympic Power to try to broadcast VR live broadcasts of the Chinese Super League. Although Li Ruigang's investment in Junt, a VR company in Silicon Valley in the United States, his acquisition of equity in the Shanghai men's basketball team, and his film and television industry content layout all belong to different fields, they all meet the development needs of micro-whale TV technology and content.

"Whether it is in the film and television or sports fields, Li Ruigang's investment methods mostly focus on the in-depth layout of upstream and downstream industries. Different from other current domestic cultural industry funds, based on strategic layout, the Chinese Cultural Industry Investment Fund and Chinese Cultural Holdings also mainly target companies with market space and potential to become industry leaders in the future. In addition, during the investment process, the company's post-service and market will also be strategically arranged. This investment model is actually more in line with the essence of industrial investment funds." Liu Deliang, founder of Xinyuan think tank, said.

"Performance, premium" becomes profit keywords

. From the perspective of project income, industry insiders said that the income sources of private equity investment funds such as the Chinese Cultural Industry Investment Fund are mainly through the listing, mergers and acquisitions or management buybacks of the invested companies. The equity premium achieves returns. If the invested company performs better, the investment fund can also make profits from the company's profits.

Taking IMAX China, which was successfully listed in the investment project of the Chinese Cultural Industry Investment Fund, as an example, on March 23, 2016, IMAX China announced that the Chinese Cultural Industry Investment Fund and Fangyuan Capital would sell 20 million shares to realize their initial investment before the IMAX China IPO. As of March 22, 2016, IMAX China stock price has appreciated by more than 63%. Based on the market price at the time of the reduction, the Chinese Cultural Industry Investment Fund and others will cash in nearly 1 billion yuan.

In addition, the success of variety shows such as "The Voice of China" produced by Shanghai Canxing Cultural Communication Co., Ltd., a subsidiary of the Chinese Cultural Industry Investment Fund, films such as "The Year in a Rush" invested in and produced by Gravity Film and Television, and other investment projects have also brought greater benefits to the Chinese Cultural Industry Investment Fund. In Liu Deliang's view, compared with industrial funds that pursue short-term returns and gain returns through the premiums brought by investment project listings and mergers and acquisitions, the Chinese Cultural Industry Investment Fund and Chinese Cultural Holdings focus more on the future development trend of the industry, focusing on the upstream and downstream of the industry. Carry out in-depth layout and participate in the direct operation of large projects such as Micro Whale TV and Oriental Dream Factory. Although this kind of strategic investment makes the investment payoff period longer, if the business is better, the benefits from corporate performance will also be considerable.

Long-term investment deposit and exit risks

As of now, the eight-year-old Chinese Cultural Industry Investment Fund has not taken many actions to withdraw from investment projects. Judging from the investment results, the development of some investment projects has not been smooth sailing. In 2014, according to the prospectus of Lianzhong Games, the final issue price of Lianzhong's Hong Kong listing was set at HK$4.25. As a pre-IPO investor, the Chinese Cultural Industry Investment Fund holds 117 million shares. Finally, Lianzhong Games closed at HK$3.75, down from its offering price. At the beginning of March this year, under the pressure of copyright fees for China Super League events of 8 billion yuan over five years, the Chinese Cultural Industry Investment Fund also transferred its shares in Sports Olympic Power to Suning Group. After the transaction is completed, Suning Group will become the controlling party of Sports Olympic Power. Industry insiders believe that for long-term investment strategies, risks such as operation and equity exit will affect investment returns.

"As far as Li Ruigang's investment landscape is concerned, it is a success to successfully gain competitive status in the industrial market in a certain field and form an overall market ecosystem. A single success and failure case cannot be the yardstick to determine its development. Currently, Li Ruigang has invested in projects. There are no cases of projects disappearing. In addition, its investment projects have not yet entered the explosive period of development. In the next three to five years, as the layout of the Chinese Cultural Industry Investment Fund and Chinese Cultural Holdings in entertainment, sports and other industries gradually improves and matures, their own influence may be fully reflected." Liu Deliang said.

According to Wei Pengju, dean of the Institute of Cultural Economics at the Central University of Finance and Economics, as a cultural industry investment fund funded by the government and composed of public funds, the strategic investment of the Chinese Cultural Industry Investment Fund in the cultural industry is in line with the attributes of the fund. Overall, the country has currently invested a lot of support in cultural industries and other fields. In this regard, Li Ruigang's layout in cultural media, sports, film and television is in line with the national strategic development needs. The layout of the entire industrial chain has also reduced the risk factors in the investment process. In the future, the Chinese Cultural Industry Investment Fund and Chinese Cultural Holdings will still need to further improve their own industrial chains and deeply integrate the various companies in the layout.

Editor: Nancy