In the slump of 2009, when venture capital deals in India went down by half, one sector stood out: the movie business.
For the first time, VC funds put their money in movies, mostly Hindi-language films, and are set to double the number of their investments this year.
The Rs 200-crore, Mumbai-based Vistaar Religare Film Fund (VRFF) backed five films that were released in 2009, including Harman Baweja-starrer ‘Victory.’
Investments were used to fund prints and advertising. “P and A (print and advertising) meant that we were last in and first out. This way we are financially protected,” said Sheetal Talwar, managing director, VRFF.
The fund is investing in 10 other films set for release in 2010, including Ram Gopal Varma’s much talked about movie on the media, ‘Rann,’ starring Amitabh Bachchan.
“VCs and PEs have certainly opened new avenues of funding. However, it is too small an amount to make much of a difference,” said Farokh Balsara, national sector leader, media and entertainment, at audit firm Ernst and Young India.
The industry is luring foreign investors as well. London-based Dar Capital Group, will produce 11 Indian films over the next 3 years and is setting up a fund expected to have a corpus of Rs 200 crore, with mainly British and Arab investors.
“After the success of Slumdog Millionaire, a lot of limited partners in the West are opening up to the idea of backing films here,” said Arun Rangachari, chairman, Dar Capital Group.
On an average, across the portfolio, entertainment investors expect an internal rate of return of 30 per cent.