×
You will be redirected back to your article in seconds

Rhythm & Hues seeks coin for int’l expansion

Vfx shop enlists banking firm to raise $20 million in equity

Rhythm & Hues Studios is hunting for new capital, and the visual effects company will likely have to sell a minority stake to get it.

R&H has enlisted independent banking firm FocalPoint Partners to help raise just south of $20 million in equity to fund the company’s international expansion.

Rhythm & Hues is already talking to investors. Sources close to the talks caution that no deal is imminent; they also emphasize that R&H is not distressed and is seeking outside funding for growth opportunities.

Known for pioneering offshoring of visual effects production, R&H has facilities in Vancouver, Malaysia and India and was one of the first American post companies to significantly break into China. Its further international expansion would focus on building facilities in low-cost locales, especially in Asia.

Company insiders say R&H has recently had to increase the portion of work it looks to offshore from 40% to 80%.

R&H’s assets include backend stakes in future films on which the company has worked, including 20th Century Fox’s “Life of Pi.” R&H no longer owns equity in any previously released pics. More and more vfx companies are providing services at cost in exchange for backend participation on films on which they work, as Rhythm & Hues has done, in hopes of sharing in the success of those projects.

Company also has a slate of its own internally developed feature films that it intends to produce.

With its shrinking margins and stiff global competition, the vfx industry — like many sectors of the entertainment business — can be difficult to invest in. Cash flow can be irregular, and the most valuable assets are often people, who may not be under contract. Furthermore, vfx work now flows around the globe in pursuit of tax incentives and subsidies, which can fluctuate as regimes and policies change.

As a result, large vfx companies rarely change hands, and it’s difficult to put a cash value on them.

Rhythm and Hues film division president Lee Berger denied that potential investors could buy the company outright.

“We are not for sale,” Berger said over email. “However, we continue to raise money for our film fund, East Grand Films, and we are also speaking with potential joint venture partners regarding the company’s continued international expansion.”

The overall outlook for the visual effects business in California is becoming increasingly gloomy as work flees the U.S. and major studios continue to grind vfx companies on price.

FocalPoint Partners declined to comment. Company specializes in capital raising, mergers and acquisitions.

More Digital

  • Alibaba Buys 8% Stake in Chinese

    Alibaba Buys 8% Stake in Chinese Video Platform Bilibili

    Alibaba has purchased an 8% stake in the Chinese online video platform Bilibili, the official Xinhua news agency reported. Bilibili is one of China’s top video streaming and entertainment platforms, with about 92 million monthly active users and 450 million page-views per day. Founded in 2009, it was listed on the NASDAQ last March. Alibaba’s [...]

  • Clevver-Logo

    Hearst Magazines Buys Clevver's Pop-Culture YouTube Channels After Defy's Demise

    Hearst Magazines has snapped up Clevver, a network of female-skewing lifestyle and pop-culture news YouTube channels that had been owned by now-defunct Defy Media. Clevver was left homeless after Defy’s sudden shutdown in November; its principals said at the time they were looking for a new home. Hearst Magazines sees a digital fit with Clevver’s [...]

  • "Brother" -- Episode 201-- Pictured (l-r):

    CBS Interactive's Marc DeBevoise on Streaming Boom, Content Strategy, and Apple

    Not everyone wants or needs to be Netflix to succeed in the streaming space. And not everyone sees Apple’s enigmatic new service as a threat. Even as rival streaming services offer gobs of content, CBS Interactive’s president and COO Marc DeBevoise sees the company’s targeted original programming strategy continuing to attract viewers to its All [...]

  • Rhett-Link-Good-Mythical-Morning

    Rhett & Link's Mythical Entertainment in Talks to Acquire Smosh (EXCLUSIVE)

    Smosh, the YouTube comedy brand left stranded after parent company Defy Media went belly-up, may be about to get a new business partner. Mythical Entertainment, the entertainment company founded by top YouTube comedy duo Rhett & Link, has been in talks about acquiring the Smosh brand, sources told Variety. Multiple potential buyers came forward to [...]

  • Pokemon Go

    Proposed 'Pokémon Go' Lawsuit Settlement May Remove Poké Stops, Gyms

    A proposed settlement in the class action lawsuit against “Pokémon Go” developer Niantic could remove or change a number of Poké Stops and Gyms in the popular augmented reality game. The proposed settlement was filed in a California court on Thursday and applies to anyone in the U.S. who owns or leases property within 100 meters [...]

  • Skyline of Doha at night with

    Qatar's beIN Rallies Support From U.S. Companies Against Pirate Broadcaster beoutQ

    Qatari powerhouse beIN Media Group has rallied support from American sports and entertainment entities, including Discovery and Fox, behind its request that the U.S. government place Saudi Arabia on its watch list of top intellectual property offenders. The Doha-based broadcaster, a state-owned spinoff of Al Jazeera news network, accuses the Saudi government of harboring pirate broadcaster [...]

More From Our Brands

Access exclusive content