Why Temasek unit bet $105m on this decades-old firm

Two months ago, Temasek’s 65 Equity Partners invested US$105 million in Neon, a 66-year old experiential entertainment company. This is not the first time that this firm has caught Temasek’s eye – its units Pavilion Capital and Seatown Holdings also participated in Neon’s S$235 million (US$174 million) investment round last year. So why is this decades-old firm an attractive investment for Temasek?

For one, Neon – valued at over US$1.1 billion – has stayed afloat since 1956, surviving numerous global economic crises and headwinds – the most recent being the Covid-19 pandemic.

After two years of pandemic-driven losses – a net loss of US$41.4 million in 2021 and US$47.7 million in 2020 – the firm says it’s profitable again in 2022. Before 2020, the company’s financials had been in the black.

Neon is in the business of event creation. Since the firm relies on tourism and in-person visits, its exhibitions were deeply affected by lockdown mandates.

The popularity of its IP partnerships sets Neon apart from competitors. These IP partnerships include the top 10 highest-grossing movies of all time – each valued at at least a billion US dollars.

Founded in Singapore in 1956 under the name Cityneon, Neon began as a family-run electrical appliance company and eventually expanded into creating interior architecture for expositions. The firm worked on projects such as Singapore’s Youth Olympic Games as well as Expo Pavilion for Qatar and Oman, among others.

Now the unicorn focuses most on creating experiences for its portfolio of studio and artifact intellectual properties (IPs) partners – it puts together exhibitions based on films and historical events. It has partnerships with companies such as The Walt Disney Company, NBCUniversal Media, and Marvel Entertainment to create life-sized animatronic Jurassic World dinosaurs and Avengers superhero suits and recreate Avatar’s alien world of Pandora. Neon and its subsidiaries currently have 16 offices across Europe, North America, and Asia.

Signs of recovery

“I’ve been running businesses for many years, and I’ve never run a business with zero revenue,” Ron Tan, CEO of Neon, a Singapore-based experiential entertainment firm, tells Tech in Asia.

But when the pandemic hit, Neon’s business was hit hard and Tan found himself in an unenviable position. The CEO says that by April 2020, the firm was making zero revenue while costs were piling up. Looking back, Tan says that was the “scariest episode” of his career.

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