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.