Bollywood is risky if ‘you make one film’

Kewal Handa is the chief executive of Third Eye Cinema Fund, a new 2 billion rupee (Dh123.5 million) alternate investment fund, which is trying to attract investors to the Bollywood market.
Bhaag Milkha Bhaag, 2013. The film starring Farhan Akhtar was a big hit for Viacom 18 last year. Courtesy: Viacom 18 Motion Pictures
Bhaag Milkha Bhaag, 2013. The film starring Farhan Akhtar was a big hit for Viacom 18 last year. Courtesy: Viacom 18 Motion Pictures

Kewal Handa is the chief executive of Third Eye Cinema Fund, a new 2 billion rupee (Dh123.5 million) alternate investment fund, which is trying to attract investors to the Bollywood market.

Why have you decided to set up the fund?

There are studios which fund films but most of them really focus on large films, celebrity films. There is definitely a need in the mid-segment – let’s say US$1m to $5m type of films which are being made in India and are more successful now. There needs to be an availability of funds for small-time producers, writers, directors. That is what we will make available. The producers who do not have access to funds from banks or large investors would now get an opportunity to go to a professional firm and get the funds.

What are the risks for investors?

Normally they say that Bollywood is a risky business. It’s risky if you make one film – if you make a large film and it fails – but if you take a portfolio approach and you capture the various value streams. Acquire films at different stages, do regional films, do international launches, buy libraries, capture satellite rights, do marketing and distribution of the film, so you are actually narrowing down the risk a lot. This is exactly what we are going to do.

What kind of returns are you forecasting?

Our strategy is not to invest more than $4m in one film. The fund is for five years. But at the end of two or three, we will see if there is excess cash and we’ll repatriate that money and after five years the fund will wind up. The target return we’re looking at is 25 per cent annual returns. We do recognise that not all of the films we launch are going to be successful, and in our calculation we have taken that 50 per cent of the films will give zero to negative returns.

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Published: June 14, 2014 04:00 AM

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