When French sales, distribution and finance outfit Wild Bunch signed a deal with US investment group Continental Entertainment Capital (CEC) in early September, it marked yet another step in the company's bid to bolster a planned European distribution network.

The deal is a rarity. With all the international banking and US private equity money pouring into Hollywood in the past year, little of it has found its way to Europe. Some say that is because the European cinematic landscape is hard for US investors to understand.

Others contend the US style of business - where the bottom line often counts more than the finished product - is still shunned in Europe. And still another faction believes that film-by-film investment is the way to go rather the slate approach.

Most agree, however, that betting on a winning management team is the number one priority for any cross-continental investments. Wild Bunch in its present incarnation was formed five years ago by former Studio Canal executives Vincent Grimond, Brahim Chioua, Vincent Maraval and Alain de la Mata.

It initially concentrated on foreign sales but has since ramped up co-production financing and has added French distribution through its local label Wild Bunch Distribution and a partnership with A-Film for the Benelux region.

The deal with CEC, which creates a fund called Continental Films, is not the first time Wild Bunch has attracted US equity.

In 2004, the company received funds from New York-based Daedalus Media Partners - as well as from Paris-based capital risk fund Iris Capital - which took a minority stake in Wild Bunch.

In 2005, Wild Bunch entered into a $145m joint-venture with US investment vehicle Virtual Studios, backed by hedge fund Stark Investments, creating a fund called Virtual Films to finance acquisitions and co-productions. At that time, Iris increased its investment, with Stark also taking a minority stake in Wild Bunch.

The CEC deal, which has supplied an equity infusion along with a $150m co-production and acquisition joint-venture, was brokered by CEC's president and CEO Benjamin Waisbren, who also negotiated Wild Bunch's deal with Stark for Virtual.

As was the case with the Virtual deal, CEC put up all the debt financing and half of its equity. The $34m capital increase in the company was subscribed by CEC, Iris and the management.

Both the deals with Virtual and CEC, which were initially signed for five-year periods, are intended for projects budgeted at more than $20m. All films acquired or co-produced by those funds will be distributed and/or sold internationally by Wild Bunch.

CEC, a Citigroup affiliate which does single-picture financing, structured finance and institutional financing, is also involved in The Weinstein Company's recent creation of a $285m Asian film fund via participation in its senior debt facility.

According to Waisbren, CEC is now active in Europe beyond Wild Bunch and 'is in the process of setting up operations on the ground there'.

Wild Bunch's desire to up the ante with the CEC deal, says Grimond, was borne out of the knowledge that 'in order to feed the network we are planning, our investment volume was not sufficient. The sum of the two funds now gives us the means to get what we need.'

Waisbren says Stark 'has done well with Virtual's investment in Wild Bunch'. The Virtual deal includes films such as James Gray's Cannes title We Own The Night (for which Wild Bunch has French distribution rights) and Steven Soderbergh's two forthcoming Che Guevara pictures, The Argentine and Guerrilla. Waisbren adds: 'Europe is exciting and an interesting place for film investors as it is a less mature market and there's less competition for our money.'

Backing management teams

Of utmost importance are the people running the show, which many say is the key to luring funds from abroad.

'The point to distinguish is not European versus American but more of a business-model issue,' says Stephen Prough, co-founder and managing director of Salem Partners, a Los Angeles-based investment bank and wealth management firm which has been involved with Crown Media Library, Rysher Entertainment and Fireworks Entertainment.

'These types of deal are management intensive. It's betting on a management team and giving them a traditional borrowing type base.'

Waisbren echoes this sentiment. In both the Virtual and the CEC deals, 'the driving element for a substantial commitment to Wild Bunch was the management team. We are not investors in movies in Europe, we are investors in management.'

And Wild Bunch's management is breathless with ambition. Since 2002, when the company cut ties with Studio Canal, where it was the company's in-house boutique sales arm, it has expanded aggressively.

In 2004, it acquired Wild Side Video and Wild Side Films from Bac Majestic as well as taking a majority stake in French distributor Pan-Europeenne Edition which has since become Wild Bunch Distribution. Last year it signed a lucrative financing and distribution deal with successful French outfit Fidelite Productions.

Renowned for their tough negotiating and an eye for quality fare - including recent Palme d'Or winners 4 Months, 3 Weeks & 2 Days and Fahrenheit 9/11 and Oscar winners March Of The Penguins and Pan's Labyrinth - Grimond, Chioua, Maraval and de la Mata live up to their shared moniker as a maverick company whose non-traditional approach to business has made it a stand out among its European rivals.

Francois Ivernel, executive vice-president of Anglo-French studio Pathe, notes that even before the CEC deal, 'Wild Bunch was already one of the rare international sales companies in Europe with real credibility and taste.'

Consolidate or die

The company has long spoken of its aim to create a European distribution network with entities in the key European territories. At present, only the Benelux deal exists but sales chief Maraval says: 'In a year and a half, we'll be there. We don't have a choice.'

The reason Wild Bunch does not have a choice, he explains, is because competitors such as Pathe, Alliance Films (the Canadian company that owns UK distributor Momentum Pictures and Spanish outfit Aurum) and Studio Canal - which now owns Optimum Releasing in the UK and which is understood to be seeking a German partner - are present in multiple territories.

Further, he explains, Wild Bunch is presently unable to compete in the French theatrical marketplace with broadcaster subsidiaries such as SND of M6 and TFM of TF1.

Joining forces seems to be the means to survival in the new international marketplace. But not at any price.

'The global market will have to consolidate,' says Philippe Aigle, CEO of French sales outfit Celluloid Dreams. 'Companies will be sold, positions will change. The financing will come either from the US or from Europe but business is more structured today and the sector is becoming more industrialised.'

Aigle does not see Celluloid's recent partnership with the UK's HanWay Films under the Dreamachine banner as an example of this. 'Consolidation is done either by financial groups or major industrial groups in the sector,' he explains.

'The plan for the operation envisioned by Celluloid and HanWay was of another nature - to bring together two independent companies.

'This operation did not 'fail',' he says, of the partial 'demerger' between the two companies. 'In the end, we felt there was a risk in wanting to move too fast towards a complete merger.

At the beginning, the objective was to combine the catalogues to enable independent cinema to be able to position itself strongly with regard to new media. This is the current plan and the operation is ongoing.'

Aigle believes companies will need to concentrate on fewer films at higher budgets. Celluloid, for its part, has apparently been approached by various foreign investors but, says Aigle, 'We are interested, but with conditions.

It's not a case of take-the-money-and-run.' He notes the Wild Bunch deal does add a layer of competition for Celluloid as, 'Once the money is raised it has to be spent.'

Wild Bunch's Grimond has a different view. 'It's not the films that need to change, it is the whole approach. These investors are sophisticated, rich and competent in terms of film. This is not stupid money; there needs to be respect for equity. We all have an interest to see that this market continues.'

Despite their plans to expand Wild Bunch's distribution activities, the essence of the company will remain unchanged. Grimond jokes: 'We're the same, just a little bit richer.'

Virtual retains a right of first refusal on all films that qualify for the fund, followed by Continental, and if films turn out to not be appropriate for either fund, Wild Bunch will take them on itself.

Importantly, via the new cash infusion, says Grimond, the company will be able to enrich its catalogue with the likes of Soderbergh's Che movies, for which Wild Bunch has international sales duties as well as French distribution rights.

And what about sales'

Wild Bunch has long boasted a diversified slate from cult hits such as Kim Chapiron's horror picture Sheitan to festival and prestige fare including Juan Antonio Bayona's The Orphanage, produced by Guillermo del Toro, and the $22m animated alien project, Terra.

The company also enjoys strong director relationships, which have yielded a pipeline of films from the Makhmalbaf family; Claude Chabrol's recent films; and more commercial titles such as Luc Jacquet's March Of The Penguins follow up, The Fox And The Child; Woody Allen's latest two pictures and the forthcoming Bin Laden documentary from Morgan Spurlock, Where In The World.

Maraval says there will not be a major overhaul of his sales slate. 'This new fund is for developing distribution,' he explains. 'Sales now roll along by themselves.'

One thing that may be reduced, however, is Wild Bunch's involvement with mid-level French films, which sometimes get lost in the company's wide-ranging line-up. Maraval cites Lionel Delplanque's President as an example.

While he will continue to work with those films, Wild Bunch may create a label to handle them specifically or they may be handled by a third party.

Still, in terms of the brand of films that Wild Bunch is so well-known for, Grimond says: 'The strategy is to continue to work with those films - that's our image, our bread and butter. There is no reason to change.'


- EuropaCorp: This summer, Luc Besson's French mini-studio completed an IPO on the Euronext exchange which raised about $100m.

- VIP: The German film production fund recently struck a strategic co-investment partnership with London-based Brass Hat Films.

- IM Internationalmedia Group: Earlier this month, the German media company signed a deal memo with R Media Acquisition LLC, believed to be a US company, for a reorganisation of the group's activities, including a divestment of its interest in the sales company IM Global.