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Columbian, Brazilian coin boosts biz

Funds will increase Latin production investment

The Berlin Film Festival often celebrates Latin American artistic excellence, but this year, financial clout was also on the program

Colombia’s Dynamo Capital unveiled a planned $150 million-$200 million private equity fund for investment in Latin American film, TV and animation outfits.

RioFilme, a Rio de Janeiro public film fund, announced aims to double funding at Funcine Rio 1, its tax-driven investment vehicle, to $20 million.

Latin America has a new management class: DC senior fund manager Cristian Conti is a former Salomon Brothers investment banker; RioFilme’s director-president Sergio Sa Leitao advised the Brazilian Development Bank (BNDES) from 2005-07.

Their ambitions also reflect Latin America’s unlocked growth potential.

Launched in 2008 and expiring Jan. 2, Dynamo Capital’s first fund was worth nearly $10 million. Targeting institutional investors in emerging markets, DC is now working with Boston Consulting Group and Korn/Ferry to develop the new fund’s operating structure and better handle the leap in size, Conti says.

“Latin America is a green-field scenario for a private equity fund focused on a media consolidation play,” he says.

The region’s fragmented film and TV biz is locked into 15 or so national industries, with little pan-regional trade.

DC plans to invest across Latin America, forging an independent media holding.

“You can share information, projects, talent relationships, co-produce, and establish a centralized administration structure as well as a centralized team focusing on synergies across the holding,” Conti says.

Many companies are young, he adds: “They often have working capital issues. Fresh capital is an attractive proposition to shareholders and gives a good negotiating position.”

It doesn’t hurt that the target economies and markets are booming, avid for content. Brazil’s GDP grew 4.9% during the 2008-09 worldwide economic crisis; 7.5% in 2010.

“Brazil’s content providers will enjoy rapid and sustained growth this decade,” says Conspiracao partner Leonardo Monteiro de Barros.

Brazil’s swelling lower middle classes are fueling ad spending; its huge TV market — free and pay — is opening up for independent producers; its huge telco market wants locally produced content, he adds.

Goosed by local blockbusters, Brazil’s 2010 B.O. skyrocketed 30% to 1.26 billion Reais ($754.9 million).

Funcine Rio 1 will invest in four companies, targeting distribution, production services, VOD and exhibition.

For Leitao, the idea is: “Choose companies with potential and help growth, injecting capital and know-how, in exchange for equity.”

Conti acknowledges the funding climate was challenging in 2009. But 2010 showed symptoms of recovery with investment levels in the region approaching a pre-crisis point, he says.

Raising coin, as always, will depend ultimately on companies’ management teams and track records.

RioFilme — which invested $900,000 in equity and P&A on “Elite Squad 2,” Brazil’s B.O. champ with 11 million admissions — made its first-ever profit in 2010, Sa Leitao says.

Though just 3 years old, Dynamo Capital is moving in illustrious company.

One Berlin market highlight was a promo of the DC co-produced “Bunker,” now in post, a thriller with genre elements helmed by Colombia’s Andi Baiz (“Satanas”). It marks Fox Intl. Prods. first-ever Spanish-language production.

DC also has two of Colombia’s most exciting movie projects: Carlos Moreno’s “Que viva la musica!” adapting Andres Caicedo’s 1976 modern classic,, and Baiz’s “Roa,” “a Colombian ‘JFK,’?” in says Conti.

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