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British filmmakers raising $120m through Enterprise Investment Schemes

EXCLUSIVE: With Enterprise Investment Scheme (EIS) rules about to change, there are currently 15 offers out raising funds in the UK, including Oscar-winning producers who between them have made hits including The King’s Speech, My Week With Marilyn and Harry Potter. Tim Adler surveys the EIS landscape and looks at the leading EIS offers on the market now.

The amount raised next year could be five times bigger if the European Union approves British government plans to raise the cap on each EIS fundraise to $16m (£10m) [More details of EIS changes are expected to be announced as part of the UK Budget on March 21.]

Financer Christopher Figg says that going out into the market and raising $16m could be actually easier as it gives investors more choice with bigger projects to invest in. Stuart Sutherland, CEO of Ovation Films, describes a $16m cap as a “game changer”.

Some see this as the biggest gold rush to hit British film since sale-and-leaseback. The tax authority has already approved many of these schemes, going some way to reassure investors who got burnt investing in British films in the past.

The big question is whether there will be enough investor appetite out there if British film tries to raise over $625 million in 2012-13. “It’s a very hard road with a sceptical audience,” says Martin Churchill, editor of Tax Efficient Review. “Financial advisers are sceptical about film because they don’t understand it.”

Neil Thompson, a producer who has raised over $5m through EIS to date, says: “There are a limited number of people out there with an appetite for film.”

“People are much more cautious,” agrees Matador Pictures producer Nigel Thomas.

Future Films CEO Steven Margolis adds: “Raising the cap won’t be some El Dorado. For us, it’s a long term haul once we demonstrate the returns we said we would achieve.”

Here are some of the leading EIS film offers in the market now:

Admit One is raising $3m covering up to 35% of the budgets for films between $2.3m and $13m. Principals Christopher Figg and Robert Whitehouse, executive producers of We Need to Talk About Kevin, have teamed up with financier Lisa Lambert.  

Argentum Films is a combined offering from The King’s Speech producer See-Saw Films and Ruby Films (Jane Eyre) raising $6.3 million between them. (See full story here).

Altus Productions is raising $3m with Prescience Film Finance acting as its adviser.

Artemis Films, the production company of Coriolanus producer Julia Taylor-Stanley, is raising $2.3m to develop its slate. Projects include the $50m Formula 1 drama Ferrari – La Scuderia, written by Manish Pandey (Senna), and the $16m biopic of poet Elizabeth Barrett Browning. Investors recoup alongside other equity and the investment is also partially covered by the production company overhead, executive fees in the budget and a portion of the tax credit. Taylor-Stanley says she plans to go out and raise a further $10m in production equity, subject to EU approval. “Private investment has been crucial to us as a company,” says Taylor-Stanley. “Our investors are invited to be a part of the process where possible. Some of them are interested in how the films are made – it’s not always just about the money.”

Formosa Films is raising $3m for romantic comedy Top Shelf. The company has a track record in EIS-funded production, having just completed thriller Twenty8K [pictured]. Formosa raised $2.5 million for Twenty8K, which AV Pictures is selling. It raised the same amount for Clubbed, although producer Neil Thompson admits his investors lost everything on that one. Despite this, half of his investors came back for more, says Thompson, as Formosa encourages its investors to get involved.

Future Production Services is raising $3m for its fourth Future Production Services EIS. Future has raised $2.7m so far through its first two EIS offers, providing production services for projects including The Last Passenger, starring Dougray Scott, and US movie The Secret Life of Dorks, currently in post. Future Films CEO Stephen Margolis says that so far his “agnostic” fund – as opposed to one tied to a sales company or a single production company — has been delivering investors promised returns.

Good Film Productions, the investment vehicle of producer Miriam Segal (The Great Ghost Rescue), hopes to raise $13m for six projects over five years. It will invest up to 45% of a project’s budget as an equity investor. Projects on Good Film’s slate include the $70 million The Infiltrator with Brad Furman (The Lincoln Lawyer) attached to direct.

Juno Pictures is a $3m development and co-production fund for My Week With Marilyn producer Trademark Films. The company is vaunting the expertise of its principals, which include Shakespeare In Love producer David Parfitt. It is developing two children’s novels as features: fantasy novel The Haunting of Alaizabel Cray and classic The Silver Sword about children trapped in Poland during the Second World War. Trademark’s Ivan Mactaggart says that development is the cheapest part of the process when it comes to owning the film.

Matador Films is raising $9.3m through three International Pictures funds providing minimum guarantees. The first International Pictures fund raised $3m for the John Cusack thriller The Numbers Station, being sold by Content.

Motion Picture Capital, the London-based subsidiary of India’s Reliance Entertainment, is raising $34m for projects involving IM Global and David Linde’s Lava Bear. It plans to co-finance 8-10 movies a year. Leon Clarance, former head of media investment at fundraiser Octopus Investments, says: “Reliance Entertainment is raising money in the UK because it wants to become a credible funding source in Europe.”

Ovation Films, which is raising $16m, has an interesting twist in that it will only invest in movies shooting in Louisiana. Harry Potter producer David Barron is leading this vehicle with fellow producers Stuart Sutherland and Michael Ohoven (Capote). The Louisiana tax credit covers 30% of local spend. Ovation will lend against the tax credit and pre-sales contracts and chip in another 5-10% of equity. It hopes to finance 10 films in this way. Arclight Films will be selling all movies financed through the scheme.

Quickfire Films is raising up to $9.4m through EIS, putting up sales advances against unsold territories, pre-sales and tax credits. The company has raised £12m historically under EIS, backing projects including Welcome to the Punch and Burke and Hare.

Revolver RDT Film Partners is raising $3m for its Gunslinger production label. It has already raised enough to finance half the budget of its latest production Offender, being sold by IM Global. Nick Taussig, deputy MD of Revolver, says that investors have bought into Revolver’s strategy of making high-concept, low-budget features with guaranteed distribution.

Shelley Media Fund, offered by Ingenious, is raising $23m. Ingenious, the biggest UK film financier in the market, has raised $38 million through Shelley to date, 80% of which has gone into 20 features including Sally Potter’s new film (previously titled Bomb) starring Elle Fanning. Stephen Fuss, investment director, says he is interested in providing more “substantial contributions” to British films.

Readers' comments (3)

  • Well its nice to see the UK tax payer is helping to support the film industry in Louisiana. Far better than funding the essential public sector services in the UK that are getting slashed, I think not.

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  • Lending against tax credits or presales, or putting up sales MGs, is not a qualifying trade for EIS purposes. Such activity would invalidate the investor's EIS relief. If this is what these companies are really doing, what did they state to HMRC the proposed trading activity was, something else? I can see EIS & film going the way of s48 as companies pile in to exploit the relief...

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  • The above is correct, "the lending of money or the bearing of the customer's financial risk" is an excluded activity. The general rule for a trade that receives royalties or licence fees (ie the way a film generates income) is that it is excluded unless the EIS company creates "the greater part of it in terms of value" of the intangible asset. Just lending or providing a guarantee would prima facie appear to breach EIS rules. It only really applies if the EIS company is the principal producer of the film. See http://www.hmrc.gov.uk/manuals/vcmmanual/vcm17000.htm

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