Hong Kong investors subscribe to movie crypto offering

The offering of Proxicoin – a securities token built on the Ethereum blockchain platform – is intended to allow fractionalized ownership in film, television, music and other intellectual property-driven content. Proxicoin will trade on the Fusang Exchange, which claims to be Asia's first fully-licensed securities exchange focused on digital assets.

The two anchor investors are Central Wealth Investment Fund, which is managed by Hong Kong-listed financial services holding company Central Wealth Group, and Step Ventures, a local VC firm that focuses on emerging technologies. Kavanaugh said their participation is "a great validation" for Proxima. He added that the transaction would remove the friction points for Chinese groups that want to invest in the US film industry.

"We are impressed by the Proxicoin team and their dedication to creating cooperation and synergies between the China and Hollywood film industries," said David Lee, an executive with Central Wealth Group, in a statement. "We are looking forward to reaping success from our investment in Proxicoin and their respected leadership on the roadmap to developing great productions using the latest technology. This is perfect for our LP investors to help create a broad and highly defensive portfolio looking to create better than market returns."

The announcement comes a couple of weeks after Proxima said it had reached an agreement with National Arts Entertainment & Culture Group, a Hong Kong-listed company with interests in film production, leisure and real estate, to create the world's largest film studio-cum-amusement park. As part of the deal, Proxima will produce up to 10 US feature films with $250 million of equity contributed by National Arts.

The Hong Kong company said in a filing that Proxima had nine months to raise or inject $100 million into the company in return for warrants that convert into a 25% stake. It will also help National Arts build indoor and water studios at its existing facility in Guangdong province, create a theme park, and update the hotel. Moreover, it will arrange for up to five overseas films and five overseas TV shows to be filmed at the studio each year.

National Arts, which has a market cap of approximately HK$1.2 billion ($153 million), owns a studio that is used for film shoots, wedding photography, and tourism. Launched in 2015, it features buildings designed to resemble Kowloon Walled City, a Chinese palace, and traditional streets in Hong Kong and Shanghai. The company reported a net loss of HK$415.5 million in 2018.

Kavanaugh's previous production company, Relativity Media, claims to have helped deliver more than 200 films with combined box office revenue of $17 billion. They include "Immortals," "The Social Network," "American Gangster," "Mamma Mia!" "Salt," and "The Fighter." The company subsequently expanded into reality television, sports management, and digital content.

In 2011, Relativity teamed up with SAIF Partners and IDG Capital to launch a $100 million fund for investment in the production and distribution of China-focused film content. As part of the deal, Relativity assumed control of SkyLand, the private equity firms' joint entertainment arm. The first film, "21 & Over," took $48.1 million at the box office.

Relativity filed for bankruptcy in 2015 only to reemerge a year later and agreed to be sold to investment firm Global Emerging Markets and Singapore social media platform Yuuzoo. The deal fell through and Relativity filed for bankruptcy a second time.

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• Topics
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