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Jun. 22--There's a reason why American actor Tom Cruise may shoot parts of his next film in India, and it's not the storyline.
Mission Impossible 4 is part-financed by Global Entertainment Partners (GEP), a US-based film fund that has raised a corpus of Rs500 crorefrom Indian investors to back North American and European movies.
The company--which has also invested in The Technician by actor-director Kurt Russell and Captain America by Joe Johnston, who also directed Iron Man 2--is contemplating raising another Rs500 crore from Indian investors--but again, none of this money will be put into Indian movies.
GEP has struck its earlier plan to invest one-fifth of its corpus in Indian movies. The problem, said A.V.T. Shankardass, founder, GEP, and a film producer, is that "Indian content is not organized well enough to make it lucrative for investors. Currently, our funding will predominantly be in North American content."
The India-born investor, instead, advises film-makers backed by GEP to shoot part of their movies or do post-production work in India. "It's my way of making up for not investing here."
India's maturing movie industry first attracted private equity (PE) investors in 2008, when Vistaar Religare Film Fund (VRFF) and Cinema Capital Venture Fund (CCVF) were launched. Both the PE firms have raised funds of Rs200 crore each.
Mumbai-based VRFF, managed by a joint venture between Religare Enterprises Ltd and Vistaar Entertainment Ventures Pvt. Ltd, has backed six Hindi movies so far, including Amitabh Bachchan-starrer Rann, but none of them has been a blockbuster. It has 10 films lined up for release this year.
VRFF managing director Sheetal Talwar did not answer phone calls by Mint.
CCVF has invested in only one film so far--All The Best, released in 2009--and is set to announce investments in two film production firms in July.
"VCs (venture capitalists) and PEs can't get returns in their investments before three-five years. It's a norm to have negative returns in one-three years," said Samir Gupta, senior partner, CCVF.
Still, analysts see big potential in Indian movies, dominated
Source: http://www.allbusiness.com/banking-finance/financial-markets-investing/14678958-1.html#ixzz1cfvC0C38
Still, analysts see big potential in Indian movies, dominated by Hindi films. India is the largest consumer of film entertainment. Around 1,000 movies are released every year and around 3.5 billion tickets sold. Besides, movies fetch predictable returns from music, DVD sales, and overseas and satellite rights.
India's film industry is projected to grow at 9% (compounded annual growth rate, or CAGR) to reach Rs13,700 crore by 2014, faster than its 5% rise the past three years, audit firm KPMG and the Federation of Indian Chambers of Commerce and Industry (Ficci) said in a recent joint report.
It's numbers such as these that have drawn PE investors such as Dar Capital and Cause Entertainment to launch movie-focused funds in India in the past six months. Dar Capital wants to invest in regional movies and Cause Entertainment is pegging itself as an investor in socially relevant films.
Vicky Dhir, co-founder of Cause Entertainment, which has raised close to Rs100 crore in three months, said the fund will invest only in projects with an "A-grade connection, be it the star cast, production house or director".
Cause Entertainment will also be investing in a movie that will have an Indian cast but an American director, added Dhir, without giving more details.
Dubai-based Dar Capital, which has garnered a commitment of Rs120 crore from its investors for its Rs250-crore fund, plans to produce 11 regional Indian films by itself over the next three years.
"New funds are finding that no one is ignoring the potential of entertainment," said Jehil Thakkar, executive director, media and entertainment, at audit firm KPMG.
The new firms have been able to raise capital from Indian investors in just a few months, whereas most other PE firms would need about a year. For the investors, movies offer a means to diversify their portfolios.
"We can't rule out interest of corporates in this space. I think media houses who know the industry would be the first to take the plunge," said Rakesh Jariwala, partner in media and entertainment practice at Ernst & Young.
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Source: http://www.allbusiness.com/banking-finance/financial-markets-investing/14678958-1.html#ixzz1cfvdESEu
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