x Abu Dhabi, UAEMonday 24 July 2017

REM Capital Management focuses on the UAE

The international distributor of the Aegis Film Fund is talking with UAE banks about investments in film.

The international distributor of a fund that financed the recent movie The King's Speech is in discussions with banks in the UAE about local investments in film.

REM Capital Management, the international distributor of the Aegis Film Fund, says it is aiming to attract financing for global productions, as well as exploring the possibility of structuring a bond-based fund to finance Middle East films.

Aegis, based in the UK, and which provided two-thirds of the budget for The King's Speech, starring Colin Firth, also helped finance the movies St Trinian's 2, The Guard and Burke & Hare.

REM, which is headquartered in London, said it was getting "excellent feedback" from Middle East financial institutions over the issue of film financing.

"Principally, we're talking about delivering investment from those banks to our fund," said Gavin Scott, a partner at REM.

"As well as that, we think we could add a lot of value to this market by potentially offering the same kind of structure on a local basis … We're looking for other partners in this market with the same skills set as Aegis," he added.

A representative at Aegis confirmed that REM was the "exclusive distributor of Aegis internationally." Mr Scott said the Aegis fund was worth US$15 million (Dh55m), and that it funded 67 per cent of The King's Speech.

"We've spoken to the senior individuals in the major banks. They've been very interested in the structure, they like the nature of the fund, they like the security. But obviously, with the publicity around The King's Speech, that helps them become more familiar with the fund," he said.

REM specialised in distributing funds that were different to traditional investments, and had other finance vehicles focused on shipping, the Asian and emerging markets.

In some markets, the Aegis fund is structured around government funding of independent film projects. Because of this, the bond is essentially government-backed, making it more secure, said Mr Scott.

"If you look at markets like Australia, the government will fund 40 per cent of a film's budget. From our fund's point of view, that means that we can pre-fund the film with 40 per cent, and receive that money from the government, which means that it's a government-underpinned investment. That makes it easier for us and for the film to raise money, because the infrastructure is in place because of tax credits," he said.

Mr Scott claimed a return of 19.49 per cent on the Aegis fund in the first year. "[This] is pretty good considering essentially it's a bond fund. You would traditionally expect to see those kind of returns from the equity market, which obviously bring equity risk. But in this sense we're generating part government-bond risk, which is obviously underwritten; the governments tend not to go bankrupt," he said.

However, there is no structured government financing or incentive plans for film makers in the UAE market. Therefore such a model would have to be tweaked were it to be implemented in the Emirates.

"There isn't the same soft money or tax credits system that would allow us to fund a film and then underpin it with government money, which is essentially what the fund does elsewhere," said Mr Scott.

bflanagan@thenational.ae