FICCI Frames looks at innovation in funding films

Our Bureau Mumbai | Updated on March 24, 2011

Discussing innovative ways to fund films in India, speakers on day two of FICCI Frames underlined the need for the Indian film industry to get transparent in its functioning and professional in its delivery, while minimising risk for investors.

Mr Bobby Bedi, MD, Kaleidoscope Entertainment, noted that the need to look at innovative ways for funding in an industry that has been successfully funding itself for close to 100 years was indeed unfortunate.

“In the last four to five years, when banks and others were willing to invest in the industry and did, we blew it. We need to get a process-oriented, self-regulated, transparent system to measure the success of films and the real profits from them. We need to re-engage with banks to win them back,” said Mr Bedi.

Mr Ranu Vohra, MD and CEO, Avendus Capital Private Ltd, observed that several business families were looking at movies as a separate asset category across Asia. “Once a family has over $100 million in assets and their secure investments are made, they look at alternatives such as art and movies. They are looking at movies as a new asset class. We also see that for this category, building a portfolio is better than a single movie idea to attract investors, as the risk perception is then lower.”

Film funds are gaining momentum with not just HNIs but also ‘classic institutional investors' joining the bandwagon, noted Mr Nirvaer Sidhu, VP - Media and Entertainment, Goldman Sachs India. While the risk appetite was high four to five years ago, Mr Sidhu observed that the new breed of investors is looking at movies differently today.

“Investors are looking at risk mitigation. While investing in movies, they are also looking at monetisable assets that can minimise the risk — like a library of past titles. They are also looking at a simple model that helps decide on how different revenue streams will be divided up-front,” added Mr Sidhu. He stressed on the need to look beyond theatrical release to monetise movies.

Mr Karan Ahluwalia, EVP – Media and Entertainment, Yes Bank, described securitisation of IP rights as one of the untapped financing options in India. “The West may have tapped the financing opportunity, but India is yet to see any large-scale development in this space. This is owing to a lack of development of the bond market as well as the fact that most entities in the M&E space here lack the necessary corporate DNA or balance sheet strength.”

Despite the perception of being a high-risk investment, he noted that the increased experience of investors will soon see film funds gaining in popularity.

Published on March 24, 2011

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