BVI company P&C Arcade Film Fund has netted investors an 11.24% return after costs.
With a lack of leverage available for the global media and entertainment industry the fund is replacing the banks who have withdrawn from the market.
Film producers, desperate to get their films made at any price, have become accustomed to paying interest rates of Libor+5 for secured loans and arrangement fees of up to 5-10% of the amount loaned. Short-term bridging loans which are vital to many productions can reach 2-3% per month.
In a bid to provide short-term liquidity the fund will finance TV and film producers by way of short-term loans. The types of finance that will be used include secure bridging and government credit discounting.
Investment manager of P&C, Christopher McGinty is also launching a similar fund, Grand Arcade Film Fund which will be listed in the Cayman Islands. The objective of the fund is to deliver an annual return of 12% in GBP after fees and expenses.