LONDON — Lawyer Michael Henry and producers David Parfitt and Christopher Figg have raised £40 million ($80 million) for a new film fund, dubbed Limelight, which will provide loans to co-finance independent British movies.
The coin will mainly be used to bankroll the U.K.’s new production tax credit, on terms claimed to be more attractive to producers than those offered by conventional banks.
Limelight will also lend against pre-sales, provide small advances against unsold territories, and invest in the development of a participating producer’s next project.
With Limelight typically offering deals covering about 20% of a film’s budget, its revolving $80 million fund should be sufficient to back movies costing a total of $400 million annually.
We are not coming to the market in the hope and expectation of raising finance which may never materi-alize: The money has been raised and we are now starting the process of investing in British films,” Henry commented.
It has already committed to co-finance an initial slate of eight movies, with a combined budget of $50 million. These include “Agent Crush,” “Bunch of Amateurs,” “Finding Bin Laden,” “I Know You Know,” “Kitchen Games,” “Lesbian Vampire Killers,” “School For Lovers” and “Yarko.”
Henry drew a clear distinction between Limelight and previous British film funds which were set up to take advantange of various tax breaks. “With the latest round of anti-avoidance legislation and the coming into force of the new film tax credit (which is specifically designed to prevent it being hijacked by film partnerships and intermediaries), the era of tax-driven film financing in the U.K. film industry has been brought to a spectacular close.”
Limelight has raised part of its money from private investors under the complex and heavily regulated structure of a Venture Capital Trust. The rest comes from investment funds and financial institutions, in-cluding Barclays and Dresdner Kleinwort.
It is offering to lend producers 95% of the value of the production tax credit, equivalent to a maximum of 19% of the budget for a British movie. That compares to the 15% or less typically offered by banks and other financiers.
Limelight also differs from other products in the marketplace because it promises not to charge producers any extra legal fees.
Once a film is completed and the tax credit is paid by the U.K. government, Limelight will give the pro-ducer another 5% of its value (typically equivalent to 1% of the production budget) to invest in developing a new project.
Parfitt, who helped to devise Limelight’s terms and sits on the board, said, “Limelight is a private, indus-try-led initiative which offers producers film finance on terms which are significantly better than those which are available in the conventional film finance market.”
With Limelight offering such favorable terms to producers, the big question is how its investors will make money. Martin Churchill, editor of Tax Efficient Review, commented, “Having successfully reached full subscription, against the odds, the challenge now facing Limelight is to provide a good return for its inves-tors.”
The Limelight board includes its non-exec chairman Stuart Standing, who until last year was chairman of corporate broking at Dresdner Kleinwort, and Jo Welman, chief exec of EPIC Investment Partners.
Welman commented, “The Limelight Fund represents and unparalleled combination of specialist skills. It has put in a considerable amount of hard work in devising and structuring a business model which should not only produce solid investment returns for its investors and shareholders, but also a much-needed source of competitively priced production finance for the British film industry.”
Henry, who has spent the past two years putting together Limelight, previously launched the abortive Monument fund, which failed to get off the ground, and the Surefire fund, which financed the development of 50 projects and provided production coin to four movies.