American Capital Strategies, one of the biggest private equity players in the U.S., has taken its first step into the movie biz by investing $100 million in Oceana Media Finance, a new Los Angeles-based film company.
Oceana is headed by chief exec Myles Nestel, a former partner in Cobalt Media Group and before that co-head of NatWest Bank’s Los Angeles division.
Company will provide debt and equity financing for the production of indie films typically budgeted up to $40 million. It will also offer P&A coin of up to $20 million for theatrical distribution in North America.
Nestel plans to strike five or so production deals and five P&A deals in his first year of operation.
The $100 million commitment will let Oceana build a diverse film finance business, Nestel said.
“The capital that has been committed will allow us to provide a ‘one-stop shop’ financing solution to the film community, from production through distribution,” Nestel said. “We will be able to finance productions of any budget size; this, coupled with the ability to finance the theatrical release of a film in North America, strategically positions Oceana as a unique alternative to the studios and other finance sources.”
Veteran distributor Mike Doban has joined Oceana to oversee the theatrical side of the business. Doban is co-founder of Freestyle Releasing, which handled the U.S. release of films including “American Haunting” and “The Illusionist.” Before that, he was senior VP of United Artists Theaters.
Also part of the Oceana team is British banker Rodney Payne, Nestel’s former partner at Cobalt and colleague at NatWest/Coutts.
American Capital is one of the largest publicly traded managers of alternative assets in the U.S., with assets of $12 billion in its portfolio, ranging from transportation, construction and health care to chemical and food products. Oceana represents its first foray into entertainment.
Oceana will offer pre-production bridge loans, mezzanine/gap loans for production, P&A financing and, to a lesser extent, equity investments. Although other financiers in the marketplace provide some of those elements, Nestel believes Oceana is the only one operating across the whole range.
He intends Oceana’s financing structure to attract talent looking to retain greater ownership of their own projects by deferring their fees in return for North American rights. He will also use Oceana’s P&A coin to do straight distribution deals with the studios.
Nestel emphasized that Oceana has raised its finance as equity in the company, rather than acting as a channel for coin from hedge funds. “This means we don’t have to rush to invest money to keep our investors happy, but as smart money, we can wait out a period when there is stupid money in the market,” he said.