Corporate funds to capitalise on film boom

With over 250 films releasing a year and that number growing continuously, entertainment companies are floating film funds, to finance film productions or buy film rights, to capitalise on the boom in film-making.

One of the first such film funds was the Indian Film Company (IFC) set up by Network18. IFC is an investments and intellectual property rights firm, which last year raised over Rs 445 crore from the Alternative Investment Market of the London Stock Exchange.

Now others, among them Pyramid Saimira, Australia's Charter Pacific Corporation, Cinevistaas, and a group of Bollywood financiers, are joining the bandwagon.

Chennai-based Pyramid Saimira Theatre, a production to multiplex company, plans to float a film fund of around Rs 250-300 crore by April-May this year.

"It will be an asset management company that will look at production and co-production of films in all languages. We intend to fund around 50 films a year," said P Saminathan, managing director, Pyramid Saimira Theatre.

The fund will look at a mixed portfolio of films with budgets ranging from Rs 5 crore to Rs 50 crore.

Television production house Cinevistaas, too, is in the process of finalising a similar model. The company would, however, not share any details.

Even foreign studios are looking to float funds to produce Bollywood films.

For instance, Charter Pacific Corporation, the Australian entertainment company is expected to form a fund to make Indian movies.

"By April 2008 we will float a fund worth Aus$ 20 million to release 5-8 films a year to begin with. The films could be in Hindi, English or any regional language," said Glynn Davies, CEO, Charter Pacific Corporation.

But he explained that the films chosen would have to have an Australian angle. This means that the film would either be shot there, or make use of post-production facilities in Australia.

"We will provide studios, exclusive marketing and promotional assistance. Also, tax relief can be availed. At least 40 per cent of the film will have to be made in Australia," Davies said.

Network18's IFC has begun financing films. It acquired rights for the Kareena Kapoor, Shahid Kapoor starrer Jab We Met from Shree Ashtavinayak Cine Vision, as well as for Welcome. A few weeks ago, the company acquired the rights of Aamir Khan's forthcoming film Gajjani.

Experts say that corporates are trying to control the entire value chain, which includes acquiring films, DVD and satellite rights.

"In the current competitive scenario, big entertainment companies overshadow individual film makers, so it makes sense for them to acquire the rights or to tie up with directors to co-produce films," said Saminathan.

"Film funds give film makers' access to money and an opportunity for investors to make money when the film succeeds."

The challenge, says film financier Sanjay Bhandari, is to raise these funds and service them. "One has to make sure they have the right film in their kitty so that the money is ploughed back into the asset management firm."