The Rs 8,500-crore Indian film industry has finally caught the attention of domestic venture capital (VC) firms. The VC firms are now creating separate funds to tap the potential in the market.
According to a joint study by industry body Assocham and consulting and research firm Deloitte, the industry’s turnover is set to cross Rs 19,000 crore in the next three years at an annual growth rate of 25 per cent.
Drug major Ranbaxy-promoted financial services firm, Religare Enterprises, ICICI Bank-funded Cinema Cinema Capital Venture Fund (CCVF) and Chennai-based integrated film-making, distribution and exhibition group Pyramid Saimira are eyeing this space to park their investment.
Estimates suggest that over Rs 700 crore has been earmarked by the fund houses for the movie business. The initial focus, according to VC fund sources, will be on film production, post production and distribution businesses.
The country’s first regulated film fund, Vistaar Religare Film Fund, was launched recently. The fund, managed by Vistaar Religare Capital Advisors and launched by Religare Enterprises, has a corpus of Rs 200 crore.
Speaking to Business Standard, Sheetal V Talwar, chairman and managing director of Vistaar Religare Capital Advisors, said the new fund is targeting budding movie-makers as well as institutions like listed film production companies.
The company had already identified eight projects, including four Hindi movies, an English film and a regional one, in which the fund house is expected to spend Rs 76 crore. The production of four films are underway, he added.
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Talwar also said that with more VC firms showing interest in the film industry, it might bring in greater degree of professionalism and transparency.
The risk associated with the investment is “high” and therefore the returns are expected to be relatively high, said the representative of a Bangalore-based VC firm.
He added that there are numerous reasons for the growth in the industry. With ticket prices as well as footfalls in movie theaters on the rise, there is an opportunity to substantially increase proceeds through box office collections, which has doubled in the last three years to Rs 485 crore from Rs 264 crore.
K S Srinivasan, director and chief executive officer, Pyramid Saimira Production International, told Business Standard that the company is planning to launch a new film fund worth around Rs 400 crore. The new fund is expected to come up before January next year.
Meanwhile, Cinema Capital Venture Fund (CCVF), backed by ICICI Bank, had set a target to raise Rs 500 crore. The fund is expected to close by the end of this month. The company is planning to invest in the established, unlisted six-eight film production companies over the next 16-18 months.
Earlier this year, PVR Pictures, a wholly-owned subsidiary of PVR, said JPMorgan Chase Bank’s private equity arm and ICICI Venture Funds Management Company are planning to invest Rs 120 crore in PVR Pictures. The film production and distribution company, which co-produced 'Taare Zameen Par’ recently, has an in-principle agreement to receive Rs 60 crore investment each from the two parties.