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Singapore’s production funds (a brief summary)

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While the local economic climate does not bode well for the country as a whole, what with the recent declaration of recession and a sudden plunge in jobs, the Singapore film and television industry seems to be holding up quite well, with help from both the government and the private sectors, as the country moves towards the development of specialty funds for the media industry, which has been set as a national-priority growth area by the authorities.

notes.jpgBanking on Singapore’s lead in fund-management and investment-trust industry, specialty funds are seen as a natural extension of the media industry’s growth, with the Media Development Authority working hard to link the local firms with investment opportunities from around the region.

Through the Singapore Film Commission, MDA continues to provide financial support for individual film projects made in Singapore, with some investments (of its own equity) in some of the new private funds, though the quantity is unclear.

The government had earlier stated that it sees long-term benefits in developing Singapore into an entertainment hub via the “halo effect” (similar to how the iPod has boost Apple’s perceived value), and hopes that this will also allow talent and skills to trickle down from the top. Broadening our regulations also mean that the promotional campaign now reads “made by Singapore”, rather than the narrower “made in Singapore”. Some S$500 million is in reserve for the film, TV and games industry, as announced in May by the MDA, and adding to this is the S$611 million pool from Singapore-based RGM, a talent management company turned film production house.

Also pouring in are production funds in the process of being put together by Hyde Park Entertainment, totalling S$107 million. Head of LA-based Hyde Park Entertainment Ashok Amritraj comments: “The Economic Development Board and the MDA are very generous in their approach to companies that have an interest in Asia. And they are very flexible in the way they allow you to structure the funds.” He added that capital came principally from the MDA and investors based in the Middle East and Singapore, adding that the authorities “have made Singapore a safe, clear haven in these crazy times.”

RGM’s CEO, Davesh Chetty, also explained that a privately secured funds sometimes work better due to the lax restrictions, and are generally faster than bank loans. “We can (finance) pre-production where other movies have to wait for bank finance; we can greenlight with a minimum of presales; our U.S. deals don’t have to be (minimum guarantee deals), they can be P&A deals; and we can use all the variants on the independent finance model — presales, gap, mezzanine and equity.”

RGM first shifted to Singapore in 2005, and has plans for its $611 million to revolve for four years, focusing on movies with an Asian connection with a US distribution deal of some sort. Budgets for films will be large by Asian standards, starting from a minimum of S$23 million. Ideally, 10 $61 million films should be completed with the budget, with Chetty pointing out that Point Break 2 (helmed by Jan De Bont, filmed in Indonesia) is the example to follow. Chetty also estimates that 90% of the films would be lensed in Asia, with at least 3 getting the green light within the next quarter.

Earlier in April, Japan’s Entertainment Farm has also established a Singapore-based production fund which houses some S$76 million for projects brought in by producer Yukie Kito. The money gives the company freedom to fully finance smaller films or take up stake in larger projects for up to S$15 million.

“This is a new way of working for a Japanese company, and we are keeping the amount raised modest as we want to raise it quickly; we have projects waiting for finance,” says Yano Satoru, director of Entertainment Farm, who adds that the fund has no debt component or leverage.

Even Singapore’s cornerstone wealth fund, Temasek, has stepped foot into the industry, taking up stake in Indian broadcaster INX Media, and is currently in the midst of securing investments with Tata Sky.

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