Private Equity watching Indian movies(space)
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Private Equity watching Indian movies(space)

Gone are the days where movie business is the most dreaded and obscure business. While the west is heavily investing in alternative energy, the new growth industry in India is something else. Its the movie business. Off late there is  lot of activity in this business and Private Equity players have entered the business in a big way. They are setting up funds with joint collaboration.  Cinema Capital Venture Fund (CCVF)  is the first SEBI approved fund with a corpus of 500 crore.

Why is this sudden rush of PE investment into Indian movie business? There are several factors leading to this. With 1.1 billion population, India has the largest movie watching audience. Close to 1000 movies are manufactured every year and the total income for 2007 is $2.2 billion (according to PricewaterhouseCoopers). This amount is expected to double in 2012.

Other funds and PE related investments include :

  1. Religare Enterprises Ltd in collobaration with Vistaar Entertainment Ventures . Fund name : Vistaar Religare Film fund. Corpus : 200 Crore. First Film : Avasthi Status : Awaiting SEBI approval.
  2. Temasek Holding Pte Ltd.. (Aranda Investments (Mauritius) Pte Ltd + Dunearn Investments Pte Ltd) holds 13.5 % in movie chain Fame India Ltd.
  3. PVR Cinemas received a PE investment from ICICI Ventures. Taare Zameen Par, Contract, Jaane Tu Ya Jaane Na are their movies.  Recent investors in PVR is JP Morgan Partners Llc.
  4. Pyramid Saimira to launch two new funds. Famous movie from this house is the expensive  Rajni Kanth starrer Shivaji.
  5. Shekar Kapur’s $1 billion media fund. Singapore Government and China’s Hina Group have already invested. Not only limited to movies but content creation for web and mobiles. Link.
  6. Mahindra and Mahindra is entering the entertainment business. Link
  7. Indian Film Company raised $110 million from Alternative Investment Market of London Stock Exchange.

What this means to the industry which is so pressed for profits is the freedom to try new things. Fear of failure is kept to a minimum and the directors can try and pursue their darkest desires in movie making. Bheja Fry with a budget of 60 lakh has raked in 12 crores. Aamir Khan starrer Taare Zameen Par has took up a subject of a dyslexic kid and made it a blockbuster(almost). This film is funded by PVR Cinemas media fund. This is a good indication that we no longer have to wait for a Shekar Kapur, Deepa Mehta or a Shyam Benegal to direct an offbeat movie.

Karan Johar can take a break or adapt and make some good movies. No, Kabhi Alvida Na Kehana is not a good movie. Its just too long and in simple terms, a disaster. Private Equity is a much needed break for an industry which has unlimited potential to transform Indian cinema and the audience. This might be the next big leap forward for Indian cinema and bollywood especially.