Chicago Private Equity Fund Targets Hedge Funds,VC,Portfolio Managers,Pensions, & Affluent Families As Alternative To Wealth Advisers & Swiss Banking

Many Hedge Funds, including New York’s Elliott Associates, are seeing premium returns from investing in film and media. While historically, film financing has been met with skepticism from portfolio managers, private equity groups, high net worth investors, family offices, and pension funds, the returns that Elliott Associates is generating as well as Honeywell Pensions, which reportedly parked more than $600 million to finance a slate of Warner Brothers’ films is opening the door to a Chicago company’s structure for being the next in a wave of attracting both institutional and retail capital.

"As a non correlated asset class, films and film finance has outperformed every non correlated asset class in the world", states Yuri Rutman, head of media finance and consulting firm Noci Pictures ( www.noci.com ). "If you look at the more than $6 billion dollars poured into motion picture finance deals in the last 3 years, the IRR across the spectrum for both studios and independents are resilient to global economic declines in other industries."

The Company is in discussions with both U.S. and international private equity partners in closing a $300 million dollar structured media & entertainment fund that would not only finance 20-30 films, but have the infrastructure in place for U.S. Theatrical Distribution either with one of a few major film studios the company is in talks with, or, as a stand alone distributor similar to Lions Gate or Summit Entertainment.

“The reason Wall Street, Silicon Valley, the Middle East, Asia, or European investors are all secretly wanting to be in the film business is that there is an exponential growth in terms of distribution channels. With digital cinemas on the rise, digital print costs minimal, the evolution of same day theatrical and video on demand releases, as well as leveraging global social media and marketing for lower cost advertising and word of mouth branding, filmed entertainment will always have revenue streams. Even tech investors are starting to look at movies as technology in terms of their delivery methods as well as productions that utilize 3D or heavy CGI”, Rutman states.

Rutman is more optimistic about film as a superior growth oriented long term investment because its not based on regional factors and has a global base. "When educated about properly structuring leveraged film finance which may also include U.S. and international tax incentives to minimize the risk", states Rutman, "many private bankers, sovereign wealth funds, high net worth investors, family offices, and pension plans understand that they are not gambling on one film hoping to win a film festival. When a company is looking to finance 10, 20, 40,50, 75 films there is more than just upside on revenues from each one but a final exit strategy after 5-7 years that can bring 300-400% returns on capital invested".

"Film, Entertainment, Media, And Hollywood in general seems to be thriving and immune from economic woes", states Rutman. "If you look at the theatrical box office receipts and DVD growth of recent films, including 'Slumdog Millionaire' or "Twilight" which had zero movie stars, the ROI on these and numerous other films exceed the ROI and revenues of auto manufacturers, real estate, stocks, mutual funds, etc. Primarily because a well made film is not a local commodity that is just bough and sold once but a global one that has revenue potential from more than 50 countries and medias including theatrical, cable, tv, satellite, airline, DVD, and the huge explosion of Video on Demand".


While some private equity outfits may balk at the notion that Hollywood is safe, Rutman adds "this country was built based on blue chip industries and for the retail investors, Wall Street and Real Estate was the path to go. Well, when retail investors as well as institutional investors are transitioning from brick and mortar investments to the film business, the underlying factor is 'why'?"

Rutman's Noci Pictures Entertainment is currently advising on several structured film slates including their own.

"From prospective clients inquiring if IRS Section 181 benefits can be transferred to foreign investors to family offices and wealth managers wondering how an investment in film slate deals can offer their clients an absolute return based on monetizing state and international tax incentives as part of revenue streams, I am amazed by the stratification in investment needs from $100,000 to $20 million", Rutman adds.

"Some U.S. investors and C corporations are looking for a strict 100% deduction of their investment under IRS Section 181. Overseas investors simply want a high yield non-correlated asset class that has long term appreciation such as our hybrid film slate and 100% control over U.S. theatrical distribution".

Rutman's model is attracting not only large scale private equity groups, but smaller retail investors as an alternative to oil & gas, real estate, stocks, commodities, etc. "The minimum participation used to be $10,000,000 to get into deals, but we are scaling our strategies to accommodate the $100,000-$500,000 investors as well", Rutman adds.

Rutman's model offers in some cases a 40-70% ROI on equity prior to revenues. "I don't know any business that you can start today where you know exactly what your ROI will be exclusive of proformas and risk analysis. Its like owning a piece of 50 fast food franchises where the total return from each and the final sale of all will net you a nice premium".

Non-correlated investment strategies can be used by investors to neutralize, or counterbalance, the risk that one, or more, of the investments in a traditional portfolio of stocks and bonds falls in value. In order to do this, investors typically place between 5% and 20% of their total investment portfolio into alternative investments to protect the remainder of the portfolio from downside risk.

Among the spectrum of asset classes targeted by high net-worth individuals, institutional investors, pension funds or private banks, alternative investments are becoming popular offering more diversification to investors' portfolios. The benefits of such diversification have been demonstrated by Harry Max Markowitz ( 1990, Nobel Prize in Economics ) in the Modern Portfolio Theory. He proved mathematically that an investor can reduce portfolios' risks simply by holding instruments which are not perfectly correlated -- a correlation coefficient not equal to one. By holding a diversified portfolio, investors should be able to reduce their exposure to individual asset risk.

If investors are attracted by alternative investments in their quest of alpha, it is because allocating to alternative investments offers advantages compared with traditional asset classes and diversification to a portfolio though involving a certain level of risk.

As investors have become more concerned about their risk-adjusted returns, especially in bearish market environments, interest in alternative investment strategies gained momentum.

”By investing in alternative investments such as a film fund, a portfolio manager or a given investor aims at obtaining performance from the relationships between securities. A non-correlated asset class behaves independently from other securities composing a portfolio. Such investment vehicles allow investors to hedge the risk that an asset falls in value and avoid any snowball effects. One of the main benefits of alternative investment strategies lies in the fact they minimize downside risk”, adds Rutman

CFO with capital markets, investment banking,capital raising with institutional and high net worth clients, family office

Chief Financial Officer

*Structures and coordinates international film finance transactions utilizing various risk minimization and hedging strategies including private equity and debt placements, structured finance, tax credit monetization, studio-co finance, reverse mergers and/or IPO exits
*Must have 7-20 years of proven experience in international film finance, investment banking, capital markets at global financial institution.
*Must have proven hands on deal making in structuring large global private placements (100 million dollars +) from international institutional investors and extremely high net worth investors.

*Must have stand alone relationships with global institutional capital and family offices.


Please email your resume and interest to careers@noci.com

Capital Markets News Showcases Private Equity Opportunity In $1 Billion Dollar Principal Protected Film Fund For Hedge Funds,Investment Banks,VC

Recently, CITIGROUP financed Relativity Media's global film fund in excess of $1 Billion dollars. The fund's manager, Ryan Kavanaugh, is 32 years old and has raised more than $4 Billion dollars for film finance in the last few years from other institutions such as Merril Lynch and Deutche Bank. Thomas Tull, the founder of Jackson Hewitt Tax Services recently closed a $2.5 billion dollar deal with Dresdner Kleinwort and Columbus Nova Asset Management for his Legendary Pictures Film Fund. GE CAPITAL recently was the lead arranger for a $200 million film fund lead by production executives Mark Gill and Neil Sacker and whose investors also include Sheikh Waleed Al Ibrahim, Zeid Masri of SilverHaze Partners, Michael Singer, Mark Esses, David Larcher, Michael Goguen, Richard Landry, Michael Reilly, and Rafael Fogel. Numerous other private equity groups and hedge funds are also bankrolling other film deals.

While the dollar amounts are significant and the structures seem to be identical in leveraging junior equity with tranches of mezzanine and senior debt, there is one question that still remains? Who gets their money back if the deals and funds flop?

A Chicago film finance and production company, Noci Pictures Entertainment, may have answered the last question. “Everyone”, states the firm’s visionary President Yuri Rutman in regards to a $1 billion dollar film deal where 100% of principal capital can be guaranteed, exclusive of profits spread out among 40-100 films.

Without any formal Ivy league MBA degrees or tenures on Wall Street or in Hollywood studios, Mr. Rutman spent many sleepless nights self-educating himself on the A-Z’s of what they don’t teach you in practice at business or film school. Leveraging the international structure of film finance with the nuts and bolts of private equity, collateralized debt obligations, tax credit incentive finance, hedging strategies, and multiple exit scenarios, Mr. Rutman, a filmmaker and actor who also spent more than a decade as a top commercial real estate consultant and entrepreneur in Chicago has come up with a formula that is attracting a lot of interest from institutional investors, hedge funds, capital markets, investment banks, high net worth investors, and other global private equity groups.

”I am not reinventing the wheel in trying to raise money to fund my passion and the aggressive interest of film finance by many global investors and financiers”, Rutman states. “I am just doing it in regards that in the last 30 years, a lot of private equity money has flowed into Hollywood, but only a nominal amount of it stayed and made any significant returns for Wall Street and Main Street alike. I just happen to want to stay for long term and what’s the point of betting on one horse if I can guarantee an entire breed”.

Rutman is no stranger to raising capital in an innovative fashion for film finance. A few years ago he met a VC investor on the Internet who read his business plan and wired him money a week later without ever meeting him. The result was a small, but very well received independent film, “Mr. Id”, which is currently one of the top downloaded films online at such sites as Brightcove.com and Vuze.com.

”I thought with “Mr. Id”, the investments would continue to roll in. But I realized I had to do go above and beyond what anyone has ever offered to investors and it took me years to figure out how to do it”.

Rutman further states that having a firm studio distribution deal for his fund would actually limit the upside of profits and revenues. While a lot of funds are structured in conjunction with a major studio, a few are being done without being married to a particular one. “Working in Chicago real estate and being a trained negotiator, what’s the point of using my skill set and everything I learned if I can’t apply that in Hollywood? I am used to shopping real estate deals on a property by property basis to the highest bidder, why not do the same thing with studios and other distributors and be in control of the situation?”

The key factor is that the major studios are in fact primarily now in the business of distributing externally financed films, so creating long term value for A-level films with A talent becomes an economy of scale as well as the creative merits and control of a movie.


Part of that control is that Rutman has written several of the scripts for the film fund himself. “Kiev Nites” is a crime epic about a boy who comes to Chicago in the early 1970’s and is growing up to be a violinist. Something goes wrong and he ends up being an enforcer for a crime family and after ten years he wants to get out. With the historical success of crime films at the box office ranging from “The Departed”, to “Goodfellas”, “Godfather”, and the tv show, “Sopranos”, the timing may be right for another international crime film hit. “My tastes run from wanting to do edgy crime dramas to thrillers ,action, horror, kids movies, etc., to doing a movie based on the real historical facts and spiritual significance of the Exodus and how it applies to all denominations and beliefs without taking sides” .


“I am in a unique category because one side I am no different that the creative filmmaker who stays up all night writing scripts and takes his final movie to Sundance or Cannes and sells it to a studio. On the other hand, I understand and am conscious of private equity and maximizing investor returns, can negotiate with the Hollywood werewolves, and still be able to sleep at night knowing that I utilized an ethical and conscious approach to making something happen and protecting someone’s money 100%”.


The Company is currently reviewing numerous proposals from various global partners including investment banks, hedge funds, private equity groups, and other investors.


Rutman is also becoming too familiar with "fishermen" who are more interested in his proprietary business model than in actually investing.


"There are so many individuals out there who claim they can structure the deal or provide a significant capital infusion, , but I think their hearts are in the wrong place. I want to make sure I partner up with someone where we are both of the same consciousness to succeed on a win-win basis. This is my life's passion and I am not looking to do a fly-by night venture with someone who isn't on the same frequency as me and wants to do a quick vanity fix and move on. A lot of the heart and soul has been taken out of movies lately and if I can resuscitate that with a financial partner who is also conscious of how positive entertainment can influence the world proactively, it will only increase the upside profit potential as well”.