Hemisphere Capital Management has established a revolving equity and debt fund to co-finance tentpole films, with an aggregate investment exceeding $200 million for its first four pics.
The Hemisphere Tentpole Co-Financing Fund’s first venture is Sony’s “The Smurfs,” released last Friday, to be followed by “The Adventures of Tintin: The Secret of the Unicorn” and “Men in Black 3” (Daily Variety, June 6). Variety first reported June 2 that those titles were part of the financing package discussions, which concluded Friday.
Hemisphere, a fund started by Winchester Capital Management in 2010, also announced Tuesday that it would fund the Brad Pitt-toplined “World War Z,” currently in production at Paramount.
Hemisphere has since replaced Winchester in running the new tentpole fund in addition to the company’s Mezzanine and Special Opportunities Funds, which both formerly operated under the Winchester Capital banner as investors in select media, film and television opportunities.
Funding for the four named projects will include an “ultimates” deal, whereby Hemisphere is betting on the long-haul performance of the movies across all platforms, sources said. In such a structure, the amount of Hemisphere’s investment will be tied to the pics’ early box office perfs.
Fund intends to choose 12 to 16 studio investments over the next four to five years, focusing on films with large global potential.
“Our investment approach is to focus on tentpoles because we believe in that side of the business and we see that as a growing business, especially internationally,” Hemisphere partner Jean-Luc De Fanti told Variety.
“The primary driver for our approach in the tentpole films is that they actually attract a worldwide audience,” added Hemisphere partner Eli Baker.
De Fanti and former CBS and Sony exec Jeff Sagansky started Winchester Capital Management four years ago with the intention of mainly funding indie fare and asset-backed financing. The duo brought in Baker two years later when they began looking into funding studio tentpoles. Baker recently became a partner in the company.
Hemisphere’s investors and strategic partners include Toho-Towa Co. and Kadokawa Shoten of Japan as well as Lotte Cinema of Korea. JPMorgan is providing the fund’s debt financing.
De Fanti, Baker and Sagansky will manage the Tentpole Fund in addition to the Mezzanine and Special Opportunities funds. Since 2007, the latter two funds have invested in MGM/United Artists, Europa Corp., Senator Entertainment and indie pics including “The Men Who Stare at Goats.”
With less coin in Hollywood for both indies and tentpoles since the financial collapse of 2008, timing may work in Hemisphere’s favor.
“The opportunity for the tentpole fund coincides with a lot of the capital receding from the studios in the last couple years,” Baker said.
Sagansky has been busy on the coin-raising front. In May, he and fellow Global Eagle Acquisitions Corp. exec Harry Sloan helped collect a $190 million public offering to close the special-purpose acquisition company.
When it launched last year, Winchester announced Hemisphere’s intention to funnel $400 million into as many as 10 pics over four years at various studios (Daily Variety, Nov. 2).
Sony’s Motion Picture Group CFO and exec VP Stefan Litt made the deal on behalf of that studio; Paramount’s Daniel Ferleger and Paul Neinstein negotiated on behalf of Par. Schuyler Moore from Stroock, Stroock and Lavan represented Toho-Towa, Kadokawa Shoten and Lotte Cinema on investment, tax and distribution matters.