The most enduring investors have equity

The world of independent film finance is fluid in the best of times. These aren’t the best of times. Gap financiers and equity funds come and go, back a film or a slate, then morph into something else or disappear. A few stick around longer. It’s tough to keep track, so here’s a guide to some active players.

Aver is a low-profile but well-capitalized Toronto-based debt financier, founded in 2006 by ex-Alliance Atlantis partner Peter Sussman and tax shelter expert Brad Sherman, using their personal fortunes backed by a syndicate of banks. Consistent and reliable, it lends about $50 million a year to 10-15 films, mostly from Canada or the U.K. It backed “Creation” and “Nowhere Boy,” both Toronto premieres, but won’t admit it because of a policy not to talk about clients.

Most other gap financiers active a year or two ago have gone quiet, changed direction, or withdrawn completely, including Aramid, Continental, Grosvenor Park, Oceana, Barbarian and the European banks.

But Diane Stidham and Danny Mandel’s L.A.-based mezzanine shop, Newbridge Film Capital, is still in the game, along with Walter Josten and Jeff Geoffray’s bridge financing specialist Blue Rider.

Now more than ever, equity is the key to indie financing. “That’s the business now, a severe shortage of gap and mezzanine lenders, and a series of wealthy individuals who will finance the equity in one or two films,” says ICM’s Hal Sadoff.

Abu Dhabi’s $1 billion production arm Imagenation is channeling equity through National Geographic, Participant (which already has Jeff Skoll’s coin) and Ashok Amritraj’s Hyde Park.

Billionaire Joe Ricketts is bankrolling the American Film Co., launched last year by Brian Falk and brothers Rob and Web Stone to make mainstream movies based on U.S. history. They plan to finance up to three films a year in the $5 million-$30 million budget range. First pic is Robert Redford’s “The Conspirator,” about the Lincoln assassination; it lenses in October.

New York-based Overnight, founded by former Miramax exec Rick Schwartz, raised a large development fund two years ago from private investors including Texan dairy mogul Alan Bernon. It has now put together a production financing structure combining equity, debt and tax to fund an initial $100 million slate of five films over the next six months. Robert Rodriguez’s “Machete,” co-financed by Hyde Park, is now shooting, followed this fall by Darren Aronofsky’s “Black Swan.” Magnet is a Beverly Hills-based venture founded last year by Jeanette Buerling of Germany and Maggie Monteith of Britain; it has raised a Guernsey equity fund from 70 wealthy Euro individuals to bankroll a $250 million production slate. The company aims to fully finance three to five films a year with budgets of $10 million-$50 million, in the genres of comedy, action and thriller. It has backed two U.S. remakes of European films, “13 Tzameti” and “The Experiment,” and is prepping Howard Deutch’s comedy “Spy vs. Stu.” Magnet is now raising a second round of production finance and a new P&A fund, and exploring whether to launch a debt fund.

Guggenheim Partners has a film fund led by Daniel Katz that invests in single projects. New York-based Wayfare Entertainment, which invests equity from a hedge fund, made its debut with Neil Jordan’s “Ondine” and is looking to back two projects a year at $15 million-$30 million. Upcoming projects include Ryan Fleck and Anna Boden’s “It’s Kind of a Funny Story” at Focus and Jim Cameron-produced “Sanctum.”

Other U.S. production companies with their own equity include Tom Rosenberg’s Lakeshore; Marc Turtletaub and Peter Saraf’s Big Beach; Michael London’s Groundswell; Bill Todman’s Level 1, backed by billionaire Edward Milstein; Philippe Rousselet’s Vendome; Bill Pohlad’s River Road; Jim Stern’s Endgame; and Belgian billionaire Michel Litvak’s Bold.

From Zurich comes Millbrook, backed by Swiss Internet mogul Thomas Sterchi. It has a $23 million equity fund to develop its own slate, as well as co-producing projects from other producers, both in English (Oliver Stone’s “W.”) and German (“Lila Lila,” starring Daniel Bruehl). Plan is to back another four to six pics dealing with social issues over the next two years, investing a maximum of 20% into projects with budgets up to $25 million.

U.K. financier Prescience raised coin last year from private investors for nine films, mostly British, with combined budgets of $150 million. It expects a similar scale this year. It launched a sister debt fund, Aegis, in March, raising $25 million to date with a target of $150 million-$200 million in 2010. So far Aegis has backed the Ian Dury biopic “Sex ‘n’ Drugs ‘n’ Rock ‘n’ Roll” and “St. Trinians 2,” both alongside Prescience.

Also in the U.K., Goldcrest has raised a $12 million production fund under the EIS tax shelter. Small gap players still active include BMS (spun off from Limelight), Quickfire (which backed “Glorious 39″) and Footprint.

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