Thema, the Luxembourg-based productioncompany, is rapidly ramping up its activities - opening a new,5,000-square-metre state-of-the-art studio in St Petersburg, Russia bySeptember and starting a UK operation headed up by formerentertainment lawyer Kami Nagdhi.

Thema, an offshoot of Russian financial servicesgiant AFK Sistema, has also expanded its investmentactivities in the last month, coming in as part-financier on two productions -Peace Arch's $5m Delirious, withSteve Buscemi and Michael Pitt, and Werner Herzog's Rescue Dawn, with Christian Bale.

Since producersMichael Dounaev and Jimmy De Brabant (of Luxembourg's Delux Studios)started Thema in 2003, the company has co-producedseven features, including Woody Allen's much-fancied Match Point. Now the company is expanding its activities to work infour main areas - as producers, part-financiers, library owners and operatorsof a studio facility.

The St Petersburg studios, at an investment of $7m, will boastseven sound stages, where production costs, according to Nagdhi,"will be 20-30 percent lower than Western Europe". "The industry has been progressing Eastwards - the Czech Republic, Romania, Serbia," says Nagdhi. "St Petersburg is the next stop." He estimates costs inthe city are 10-20 percent lower than even Moscow.

To act as afurther lure for foreign productions, Thema runs itsown film financing fund from private equity and can "come in as co-financiersif that is required," says Nagdhi. "We have our owngreen-lighting procedure and can take away the hassle of [securing] privateequity money."

AFK Sistema, whose offshoot SistemaMass Media fully owns Thema SA, was part-floated (16.4percent) on the London Stock Exchange in Russia's largest-ever IPO lastFebruary, raising $1.56bn.

For its next bigproduction, Thema has secured the co-operation ofYuri Gagarin's estate in a bid to tell the Russian astronaut's life story, withvaluable pre-clearance to shoot at Russia's space centre to film launches.

According to Nagdhi, Managing Director of Thema'snew London setup and head of worldwide development for the company, Thema's "film-financing activities will now be based inLondon. We're very well placed to develop projects from here," he added.