Independent film companies with private equity funds are always. Movie finance film equity finance, loans, and cashflow. No loan payments are due during the film production. Indian film production companies are attracting investors for. The svca published an annual report on the southeast asian private equity pe and venture capital vc industry, including interests in internet gaming. And thats what a movie is, a production, akin to funding a. Recoupment of principal and interest on the loan is 75% of the net proceeds of the film project to the lender with 25% of the net proceeds to the film maker until the loan is paid in full. Mediamonks has purchased food and liquids film studio caramel pictures, based in amsterdam, for an undisclosed cash sum. To assess the performance of private equity investments and funds, two measurements are typically used. Most private investments are taxadvantaged and therefore represent an efficient way of investing into film. Now that you know what a ppm is, and how it can help you raise money from film investors, lets look at the 10 sections of a film ppm.
These loans are subordinate to the seniorbank production loan, but in turn, the gapsupergap loan will be senior to equity financing. Chinese private equity firms find lucrative returns in. Jul 02, 2015 chinese private equity firms find lucrative returns in film production studios advertisement now is the perfect time for chinese private equities to invest in hollywood productions as the mainland. Capital can be invested at an equity, mezzanine or gap level generating proportional revenues. Given the precarious state of foreign presales nowadays, the majority of a film s budget must come from private equity investors. With anna gunn, james purefoy, sarah megan thomas, alysia reiner. Working with film investors is a crucial step in moving your film project forward and vital to finishing a quality indie film.
A simple guide to financing an independent film with private. Shortly before its premiere, it was acquired for theatrical distribution by sony pictures classics and was released in the united. Much of a producer s success or failure when producing a film independently hinges on obtaining funding from a bank or equity investor. Creative media industries institute roadshow also partners with the creative media industries institute cmii at georgia state university to apply innovative technology to reduce the cost of film and television productions. Players like relativity media, which invested in slates at sony. It was one of the first companies of its kind to pair major motion picture production with major wall street private equity and hedge fund investors, including abry partners, aig direct investments, bank of america capital investors, columbia capital, falcon investment advisors, and mc venture partners. Film finance recoupment for private equity investors. Leisure theme parks, waterparks, family entertainment centers, bowling centers, karting, restaurants, ski resorts and others. Leveraging north carolinas status as a leading producer of motion pictures, filmnc capital management, llc is planted in fertile soil as it fulfills its company mission of bridging private equity and featurelength motion picture production. Why dont private equity firms actively invest in films. Equity is a 2016 american financial thriller film directed by meera menon, written by amy fox and starring anna gunn, james purefoy, sarah megan thomas, and alysia reiner the film premiered in competition at the 2016 sundance film festival on january 25, 2016. Jun 26, 2019 consider private equity, hedge funds if you have a lot of cash to invest, or crowdfunding sources for general projects. Equity equity based financing is simply having investors contribute moneyactual cashto the production in exchange for an ownership interest in the film.
Film private placement memorandum what is a ppm and how. Focus and clients in numerous entertainment and leisure sectors. Father and daughter film in the music business location. Film funding is based upon a monthly draw schedule which is agreedto with the film maker prior to closing. Jan 17, 2019 for whatever reason, most people coming into movie world have no idea what private equity means, and if you dont, it can turn a discussion of financing a film into a sea of meaningless jibberjabber.
Many producers have patchworked creative combinations of equity and debt finance with government grants and subsidies in order to cover the entire budget of the film. The distribution waterfall is the order in which a private equity fund makes distributions to limited and general partners. Equity equity based financing is simply having investors contribute moneyactual cashto the production in exchange for an ownership interest in the film and the profits derived from the. Philip also launched an asset management and private equity fund which is an investment vehicle that finances music budgets of films and tv in exchange for the intellectual property rights to the original music and acquires business that fit vertically into the niche. Acquisitions are an integral part of the motion picture business. Invest in the fund of a prestigious independent production company to mitigate your risk. It connects the most promising movie ventures with the most suitable individual investors, a. How to make money investing in independent film makers. This is part of a series of book excerpts from the independent filmmakers law and business guide. With a feature film, commercial production and post production facility inhouse buffalo 8 offers a top to bottom solution. A group of private investors, plus a mezzanine facility via newbridge film capital and a credit facility funded by a consortium of banks led by cit and rbs greenwich capital.
Financing, shooting, and distributing independent and digital films designed to introduce filmmakers and others interested in creating content on the legal issues involved in the filmmaking process. In addition our firm offers clients access and familiarity with capital markets. Privos entertainment works with global family offices, their funds, and portfolio companies on a wide range of hollywood investments in film finance, digital and social media, music, gaming, and entertainment. Rw media is a mumbaibased media and television production company owned by investment banker ashok wadhwa while callista capital is a singaporebased private equity firm. Senior investment banker naomi bishop is threatened by a financial scandal and must untangle a web of corruption. Outside the box films partners launches, private equity. Presales driven structure whereby somemany of the films domestic and international licensing rights are presold to enable a senior financier to cash. Tenenbaum has a background in putting together funds for investments via private equity real estate deals. Internal rate of return irr, and multiple on invested capital moic, also called total value to paidin capital or tvpi. This is a very risky form of capital investment and accordingly, usually carries interest rate of 1520%. Many filmmakers think the hurdle is finding investors, but learning with whom and how to work, to protect both the investor and producers is equally important and might make all the difference between a film that gets completed vs. Mbs is a film and tv studio real estate and production services platform. Martin sorrells s4 capital has continued to expand the capabilities of its creative digital content production company mediamonks and its programmatic consultancy mightyhive with the addition of two businesses. Oct 26, 2015 investors can also indirectly benefit from the film production tax credit.
May 23, 20 i agree with anirudhs basic principle that this is outside the realm of a pe firms expertise although i would debate the validity of the overview of how a pe firm operates. Jul 16, 2018 equity driven financing structure whereby the majority of the finance plan is raised from private equity sources private investors, high net worth individuals, family, friends, etc. Learning the contents of a film private placement memorandum is easier than you may think. May 16, 2018 given the precarious state of foreign presales nowadays, the majority of a films budget must come from private equity investors. Hifilm is a romanian production company that provides complete production services for documentaries, advertising, film and television. Before acquiring any literary property, such as music, book, screenplay, teleplay or a motion picture, the buyer will require proof of ownership from the seller, to ascertain the status of the sellers rights, that is, clean chain of title.
Get film investors prepare, find, attract, pitch, secure. The enhanced film funding program allows film makers the ability to obtain up to 75% of the film s budget with only 10% cash requirement from the client or angelinvestor. She founded an independent marketing consulting firm in 2004, to capitalize on her years of experience positioning and marketing private equity strategies globally. Many filmmakers think the hurdle is finding investors, but learning with whom and how to work, to protect both the investor and producer s is equally important and might make all the difference between a film that gets completed vs. Investors can also indirectly benefit from the film production tax credit. Film movie theatres, post production, film distribution, production rental, film libraries and related sectors. The southeast asia region experienced a bumper year for both private equity pe funds and venture capital vc investments. With partial equity raised, you are then able to procure a loan from a bank or a private lender on the unsold territories of the film and additional elements of collateral, such as the intellectual property or corporate guarantees.
For example, if a private equity source is found individuals with capital or a private wealth management firm representing personal funds, the investor pays for the film or tv production, and in return receives an equal amount of capital in taxincentives, presales, and state tax credits, thereby making the investment and recoup a wash. Sections of a film private placement memorandum 1 summary of the offering. Gramarye will advise roadshow equity partners on content selection and production. Our associates have many years of on the ground film experience and timetested knowledge in the production. Feb 01, 2017 it often gives the lender the rights to convert to an ownership or equity interest in the production company or underlying film project if the loan is not paid back in time and in full. Our associates have many years of on the ground film experience and timetested knowledge in the production and funding of films. His first of many films he hopes to help finance is so b. Indian film production companies are attracting investors. Simply put, in the world of independent film, private equity usually means a financial investment in your movie. In order for a film to be considered for equity film financing, themovie or production must exhibit inherent mitigated risk by having secured assets that outweigh the total budget based on current marketplace trends. Private equity funds have started pouring millions of dollars into production companies, helping them churn out stuff for a burgeoning market hungry for new films. Private equity changing face of film industry hollywood.
Private equity is considered an illiquid investment because it must be held for a number of years. Successful filmmakers know how to deliver clean chain of. There are 5 main methods of financing the production of a film. Home of filmnc capital management filmnc capital management. It was one of the first companies of its kind to pair major motion picture production with major wall street private equity and hedge fund investors, including abry partners, aig direct investments, bank of america capital investors, columbia capital, falcon investment advisors, and mc. A gap loan becomes a supergap loan when it extends beyond 1015% of the production loan required to shoot the film. New tax code section 168 k permits the immediate deduction of 100% of the cost of films and television programs if they would have qualified under. The aramoviearb equity strategy is a private equity vehicle targeting hollywood films. This is because a bank is usually unwilling to bear the risk beyond 15% of the budget.
Outside the box films partners launches, private equity firm. Founded in 2004 and based in central bucharest, hifilm maintains a vast network of connections in the global film industry, from acclaimed directors to specialized camera workers, through which it can recruit the right professional for every task. Founded in 1993, gemini investors is a massachusettsbased private equity firm that provides capital and strategic resources to lower middle market companies. With the austin film festival upon us, it dawned on me that were frequently consulted with on questions of funding pertaining to new ventures, startups, and constantly asked about getting a film, game, or book funded for production, but rarely is it clear to anyone how funding a startup isnt remotely like funding a production. Chinese private equity firms find lucrative returns in film production studios advertisement now is the perfect time for chinese private equities to invest in hollywood productions as the mainland.
Hedge funds use slate financing, which invests in a portfolio of films, to. Film funding options go much further than just film investors. S4 capital acquires film studio caramel pictures and. Andersen tax llc is the founding member firm of andersen global, a swiss verein comprised of legally separate, independent member firms located throughout the world providing services under their own name or the brand andersen tax or. Many filmmakers think the hurdle is finding investors, but learning with whom and how to work, to protect both the investor and producers is equally important and might make all the difference between a film that gets. Given the precarious state of foreign presales nowadays, the majority of a films budget must come from private equity investors. Equity is a 2016 american financial thriller film directed by meera menon, written by amy fox and starring anna gunn, james purefoy, sarah megan thomas, and alysia reiner. In the uk, for example, this system provides filmmakers with 20 per cent of costs back as a rebate from the government. Significantly, the uk film tax credit is bedded in firmly and financiers are happy to lend against it, and uk producers are now able to access private equity from some heavyweight new players. Issuing a ppm lets your company sell shares to passive investors, those who invest, but take no active role in the production, in order to raise the money needed for the film project. Film funds offer a possible route for investors financial times. In the uk, for example, this system provides filmmakers with 20 per cent of costs back as a. Chinese private equity firms find lucrative returns in film.
However, equity investors are more conservative when it comes to pouring money into film, tv, vr and web projects. Consider private equity, hedge funds if you have a lot of cash to invest, or crowdfunding sources for general projects. Filmangels is the worlds first angel investor group dedicated to funding independent film. Jun 08, 2016 equity based financing is simply having investors contribute moneyactual cashto the production in exchange for an ownership interest in the film and the profits derived from the exploitation. How to finance an independent film in the current marketplace. Urged on by private equity investors, endeavorwme, caa and uta have set up affiliated entities endeavor content, wiip and civic center media, respectively in. In order for a film to be considered for equity film financing, the movie or production must exhibit inherent mitigated risk by having secured assets that outweigh the total budget based on current marketplace trends. Private equity funds in film industry newspaper dawn. Film private placement memorandum what is a ppm and how to. Equity driven financing structure whereby the majority of the finance plan is raised from private equity sources private investors, high net worth individuals, family, friends, etc. National or regional bodies do not usually expect any financial returns generated from the exploitation of the film. The film premiered in competition at the 2016 sundance film festival on january 25, 2016. Other music publishing and catalogs, recorded music, music venues.