2006 Oscar Winning Films Shows That Private Equity Investment In Hollywood Is Paying Off For High Net Worth Alternative Investors

High Net Worth Investors, Family Offices, Private Equity, Alternative Investment, and hedge funds, And, Other Sophisticated Financiers Are Flocking To Hollywood As A Cash Cow. A majority of these investors have recently sold their blue chip or technology companies and are now in a position to be part of the glamour of show business as well as its high profit margins. One producer is setting up an innovative structure that would have a potentially high upside with "A" actors, revenues across multiple films, and and an exit scenario that would give a financial partner a hedge of profits and other sweeteners superior to any other competing film company.

Los Angeles, CA (PRWEB) March 18, 2006 -- 2006 Oscar Winning Films Shows That Private Equity Investment In Hollywood Is Paying Off For High Net Worth Alternative Investors.

"Brokeback Mountain" was partially financed by Bill Pohlad whose holdings include the Minnesota Twins. "Capote" was financed by a private equity fund. "Crash" was financed by real estate developer Bob Yari.

Apart from privately financed films outside the studio system winning Oscars, and, combined with high dollar sales of the films at the Toronto and Sundance film festivals, high net worth alternative investors are seeing far greater returns in a shorter time span with movies than they would see with a lot of other investment vehicles.

The money is smart, the product high. These are not straight to video exploitation films but "A" films with "A" talent that is made for a fraction of what a studio would make it for, yet is done to exploit the big studio product deficits.

The innovation behind independent film finance is manifesting itself with a plethora of investors and film projects that are aggressively attracting high net worth alternative investors, venture capitalists, hedge fund managers, qualified purchasers, futures traders, family offices, ex-founders and CEO's of .com and other companies, and matching those with breakout films and success stories.

"Kiev Nites", an epic crime drama in the veign of "Goodfellas", "Scarface", "Gangs Of New York", "Casino", and others is one film that is part of a package of high quality independent films where the potential returns from numerous movies would enable investors to have a broad source of revenue streams from film festival sales, domestic and foreign distribution, as well as video-on-demand broadcasts.

The script for "Kiev Nites" and some of producer Yuri Rutman’s other film projects is currently making the rounds to attach a few A-list actors and has received the blessing of one of the top talent agencies in the film industry which holds the political key to bankable actors, sophisticated distribution channels, and film festival representation.

Rutman has started to field interest from different financiers to partner up with him on “Kiev Nites” as well as a slate of film projects. "You have all these high net worth guys like Fred Smith of FEDEX and Norman Waitt of Gateway Computers who financed "My Big Fat Greek Wedding", Max Levchin and David Sacks of PAYPAL, Marc Turtletaub from The Money Store, Roger Marino from EMC Corp, former Chicago bulls co-owner Jim Stern, Jeff Skoll Of Ebay, Sidney Kimmel Of Jones Apparel Group, Minnesota Twins owner Bill Pohlad, real estate developers such as Bob Yari and others all started to bankroll films. I am talking with similar guys who recently sold their companies for a gazillion dollars, are bored, looking at the sunset in nowhere, USA, and have always wanted to be in the film business for tax, vanity, or alternative investment reasons".

The market has been very big for sophisticated independent A-level films selling at 3-10x their investment to big studio distributors.

"Alternative venture investors are seeing a window of opportunity that the big studios are hungry for product. A compelling crime drama such as "Kiev Nites", and a few high end horror films has an innovative risk minimization strategy, and built-in worldwide audience for crime films and shows like the "Sopranos" would really be a huge launchpad for us and our financial partners. Especially if we can hedge the financing across several films"

Rutman is currently reviewing partners capable of doing single picture financing at $1.5-$2 million dollars or a slate of films to hedge their revenue streams.

The large opening in financing sophisticated films comes from two sources. On smaller budgeted films, studios are paying a hefty premium for films as an alternative to their continuing track record of losses at the box office. "Its panic time at the studios". adds Rutman. "All the big budget films are tanking. What’s profitable are films such as "Saw" which was made for 1.5 million and has made nearly 100 million dollars worldwide and spawned a sequel. Or a $200,000 film like “Napolean Dynamite” with similar results."

The second part of the success factor is that the total cost of larger films in the $6-10 million dollar range. An investor puts up 30-50% in equity , and in some cases, if the film has strong cast, the entire budget is financed through foreign sales. Add a DVD and Cable deal to the equation and sometimes investors can see revenues on a film before its even made.

“My business model is based on two kinds of films. The 1.5-2 million 100% equity films that can be sold at a festival. Or the larger budgeted ones using the above mentioned formula.”

Rutman is also becoming too familiar with "fishermen" who are more interested in his proprietary business model than in actually investing.

"There are so many individuals out there who claim they have high net worth, but I think their hearts are in the wrong place. I want to make sure I partner up with someone where we are both of the same consciousness to succeed on a win-win basis. This is my life's passion and I am not looking to do a fly-by night venture with someone who isn't on the same frequency as me. The best partner is someone who recently sold his company for 50 or 100 million dollars, is sitting on an island without any clue what do with the next phase of their life, and has always secretly wanted to be in the movie business with someone who is ethical and whose main objectives is to focus on investor's return as the prime objective. Plus, I have an innovative exit scenario and long term growth strategy that is superior to any competing entity. "

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