NewswireToday - /newswire/ -
Chicago, IL, United States, 2010/08/10 - Well capitalized affluent investors, private equity groups, hedge funds, venture capitalists, family offices, sovereign wealth funds, pensions, & endowments can't possible be in an inner VIP network of ground floor investments.
Investors who are actively seeking to invest in shares of high yield investment opportunities, undervalued small cap stocks, offshore funds and hedge funds, or even pre-IPO private equity investment opportunities follow a crowd mentality of deal sourcing that doesn't always net them the return or value their financial investment was allocated for.
And in most instances, even well capitalized affluent investors, private equity groups, hedge funds, venture capitalists, family offices, sovereign wealth funds, pensions, & endowments can't possible be in an inner VIP network of ground floor investments that are only accessible to a few. So they are forced to park their internal equity into pre-ipo companies, small cap stocks, or portfolio managers hoping for a different result which doesn't always materialize.
One Chicago company, Noci Pictures Entertainment (noci.com), has created a private equity marketplace opportunity that takes the guessing of alternative or ground floor investments by giving investors an investment transparency and certain guarantees on their equity which is hedge with state film tax credits & rebates as well as scalable international ones.
"Historically investment in film was either structured without any risk minimization or the junior equity was crushed by the repayment of mezzanine & senior debt in large studio film slates", states Yuri Rutman, CEO of Noci. "Investors thought that just by having their investment allocated with too many other tranches or based on fantasy mote carlo simulation models, there would a higher propensity for success. Unfortunately the superior returns in film finance and film investing were only successful withing film funds or film production and distribution companies that had a grasp of structured film finance, the commercial viability of a story, as well as international distribution.
While films such as "Paranormal Activity", "Hurt Locker" and even "Avatar" were primarily financed with private equity, the upside in revenues for any private investment in Hollywood comes down to numerous factors that keep evolving every week at the box office.
"There are plenty of affluent investors, wealthy families, hedge funds or private equity groups that come into the film business and leave just as quick", Rutman adds. "Mainly because the partnerships weren't based on precise risk minimization strategies. I don't know of any investment right now aside from film that can offer a guaranteed rate of return before profits, especially if hedged not on a one hit wonder, but spread among 10,20, 50 films where there is a also a control of theatrical distribution".
"We have a lot of wealth advisers, portfolio managers, financial planners, and accredited high net worth affluent investors and family offices wanting to be educated about film as an asset class. A lot of former real estate developers, oil & gas speculators, hedge fund managers, and successful Silicon Valley investors seem to understand the model", Rutman adds. "But when we have investment inquiries coming in from New Zealand, Europe, and Asian investors, the consensus seems to be that they all understand that no matter how the S&P's, DOW, Yen, Bund, or Oil Performs in the markets, people are still going to want to see movies and be entertained".
Investors are starting to have a reality check that they can go online, have a recommendation from their financial adviser or research the next hot investment opportunities in internet, technology, biotech, oil & gas, or even alternative energy and see that there is a lot of capital chasing deals with only a handful of investors that ultimately have an exclusive windows into wither private investment opportunities or a handful of fund managers than can really have a consistent ROI.
"So now investors need to think outside their box and re-educate themselves on other alternative investments, especially media & entertainment, which seems to be immune to economic factors as well as movies still being the number one export of the United States", adds Rutman. "Plus there is really no longer an absolute need for movie stars to headline indie films as the films themselves seem to be star, especially with niche social media and marketing of films where the upside in revenues from theatrical, DVD, Video On Demand, Cable, mobile, and Internet VOD only increases the potential revenue streams".