Brazilian private sector company Aracruz Celulose has teamed with state bank BNDES and risk capitol firm Rio Bravo Investimentos to launch a new equity investment film fund, the RB Cinema I Funcine.
RB Cinema I Funcine will invest Reais 13.5 million ($6.5 million) in Brazilian nationality productions with international market potential, and in the Brazilian exhibition sector.
Fund manager Thierry Perone plans to raise finance for a second investment fund, he confirmed at Cannes.
RB will provide 20%-30% gap finance and P&A coin on movies investing in a diversified portfolio of Brazilian films, at the level of $240,000 to $725,000 a movie.
Films can be co-productions but they must have a Brazilian nationality certificate, and a Brazilian director and a screenwriter.
RB’s first three film investments — a debut, a high-end pic and a film by a promising young director — will be announced today in Cannes.
The private equity fund will also rep international rights on the pics and in a second phase will create an international sales agency, Peronne said.
Fund money will take advantage of a Brazilian tax incentive facility for film investment, the Funcine Audiovisual Industry Fund, which was created in November 2003.
Funcine investment vehicles offer companies tax credits equivalent to twice their film investment, which is capped at 3% of their tax liability.
Investors share in returns from a film once it moves into profit.
The state-backed BNDES is Brazil’s National Bank for Social and Economic Development, Latin America’s biggest bank. It extends equity investment and long-term low-interest credit lines to companies in strategic industries.
Listed on the New York stock exchange, Aracruz Celulose is the world’s biggest producer of bleached eucalyptus pulp, used to make paper.