UK gets multimillion-pound content fund

Stargrove Pictures has previously invested in UK dramas such as The Fall

A new Enterprise Investment Scheme (EIS) fund has been set up in the UK to provide financing for high-end TV and film companies to meet demand for originals from the likes of Netflix and Amazon.

The UK Creative Content EIS Fund will deliver equity finance to UK screen content companies to help them grow and has been set up in association with the British Film Institute (BFI).

The fund is designed to exploit the “global surge in demand for premium content largely fuelled by the rapid growth of subscription services such as Netflix and Amazon,” according to the BFI.

The BFI has chosen partners Calculus Capital and Stargrove Pictures to manage the fund, with the team looking to raise £20m (US$25.3m) from investors in the fund’s first year.

Calculus, a growth company investor, created the UK’s first approved EIS fund 20 years ago. Stargrove’s principals, meanwhile, have overseen more than £1bn of investment in screen content, backing productions such as The Best Exotic Marigold Hotel, Suffragette, Call the Midwife, The Fall and Doc Martin.

Amanda Nevill

All investments are to receive advance assurance from HM Revenue and Customs before Calculus engages capital. The fund is targeting £2 return for every £1 invested, over a target four- to six-year investment period. This does not include the EIS tax benefits, which are in addition. The minimum investment has been set at £10,000.

The recommendation for the UK Creative Content EIS Fund came out of last year’s BFI Commission for UK Independent Film, chaired by Lionsgate UK CEO Zygi Kamasa.

One of its key recommendations was the establishment of an EIS fund to encourage a new wave of investors into the sector and deliver vital equity finance to help independent, UK screen content companies scale up.

The fund will be managed independently, but in association with the BFI, which is prioritising a focus on diversity and inclusion in order to uncover new voices and talent.

The EIS is designed to help smaller, higher-risk trading companies raise finance by offering a range of tax reliefs to investors who purchase new shares in such firms.

Money invested in the UK Creative Content EIS Fund becomes eligible for these benefits, which include income tax relief at 30%, tax-free capital gains, full capital gains tax deferral on other capital gains for the life of the investment, loss relief and full inheritance tax relief on investments once held for two years.

John Glencross

Amanda Nevill, CEO of the BFI, said: “Never before has the world been so hungry for stories, to be enjoyed on screens big and small. The UK is at the centre, the master storyteller, driving an industry that is amazingly worth almost £8bn to the economy and growing.

“In the midst of this expansion, we are acutely aware of the need for investment so that film and other screen content companies can scale up. The BFI is excited about the opportunities this fund will present for a new wave of investors to get involved with our magical industry alongside Calculus and Stargrove, who have a wealth of experience and knowledge.”

John Glencross, CEO and co-founder of Calculus Capital, said: “This is a new breed of EIS fund in this sector. It will focus not on project finance but on building and growing companies involved in a broad variety of popular productions, across a range of platforms.

“Netflix and Amazon have achieved global growth by offering original premium content to subscribers. Traditional studios, distributors and broadcasters are responding to the challenges of this changing and expanding market.

“With exceptional talent and infrastructure, the UK is already well on the road, generating unprecedented spend in the UK on making new films and television productions and well positioned to benefit from this trend.

“We are also seeing increased merger and acquisition activity around content companies. All of this is creating compelling investment and exit opportunities for investors.”

Stephen Fuss

The fund has been welcomed by the UK’s digital and creative industries minister, Margot James, who said: “The UK’s creative industries are now worth more than £100bn to the UK economy and through our modern industrial strategy, government and the sector are working together to create further investment opportunities.

“This new fund will give our exciting creative content companies the chance to grow and develop even more content that will resonate with viewers both in the UK and globally.”

Stephen Fuss, CEO of Stargrove Pictures, added: “This is an exciting time for the UK creative industries. We will use our expertise to identify exciting new talent, and our experience and contacts to help investee companies to grow, innovate and succeed.

“The fund will unleash investment in the UK’s creative industries and enable independent UK screen content companies to retain a greater financial interest in the intellectual property they create so they can capitalise on their projects and talent and grow their businesses further.”