Bollywood goes global to sell film stakes

Foreign private equity investors, studios and film funds will be given a chance to invest directly in Bollywood films at the project level as the world's most prolific movie-making industry goes into capital-raising mode.

UTV Software Communications, the entertainment group controlled by the Indian entrepreneur Ronnie Screwvala, and in which Disney also holds a stake, said Bollywood could raise up to $1bn over the next two years from selling stakes in its huge "slate" of film projects.

UTV, which has a London-listed film unit, is planning to sell equity stakes of up to 50 per cent in individual projects or groups of projects from its slate of 25 movies and is looking for investment in the range of $100m.

"For Indian cinema to go to the next level, there's a one-word answer, which is scale," Mr Screwvala told the Financial Times.

"And we'll never get scale unless we start tapping the international market for co-funding."

Hindi-language Bollywood and its Indian regional language cousins constitute one of the world's largest film industries, producing more than 1,000 films a year.

But Bollywood has yet to fully emerge from its roots as a cottage industry based in Mumbai's northern seaside suburbs.

In 2007, Indian movies earned about $2bn at the box office compared with about $27bn for Hollywood.

But no one doubts Bollywood's potential. Indian box office earnings grew 15 per cent in 2007 compared with 2 per cent growth in the US.

Mr Screwvala, who is the only Bollywood producer to have been involved with the release of a number of Hollywood films, including Namesake (2006) and The Happening (2008), said the Indian film industry was improving its quality.

Its international appeal has been enhanced by the success of Slumdog Millionaire - the Oscar-winning British film about a Mumbai slum-dweller who rises from poverty to win the Indian version of the global television quiz show Who Wants to be a Millionaire ? - which has generated interest in Indian subject matter.

"The inflection point for Hollywood, when Hollywood really grew, was when the 'JP Morgans' entered the space," Mr Screwvala said.

He said aside from private equity operators, there were a lot of $1bn-$3bn film funds that have been floated around the world and which need film project slates to invest in.

"We believe if you can tie up with those over the next year or six months, this will be the next step for taking scale up in India overall."

Mr Screwvala said investors would expect the returns typical of the successful Bollywood operators, or an internal rate of return of about 20-40 per cent.

Biren Ghose, executive director of Eros International Films, another Bollywood house with a London listing, said his studio was involved in 14 movies this year that are a mixture of acquisitions, films developed in-house and co-productions.

"We are open to the model," Mr Ghose said of the idea of inviting equity investments into Eros's slate.