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Film finance hedge fund Aramid aims to double assets


Date: Monday, February 25, 2008
Author: Ingrid Smith, Thomson News.com

Firm wants to push assets past 400 mln usd as tightened credit markets spark interest from producers.

LONDON (Thomson IM) - Hedge fund Aramid Entertainment Fund is embarking on a 200 mln usd fund raising as it seeks to double assets under management and exploit the opportunity created by tough credit markets for film producers.

A spokesman for the fund, which is backing the film adaptation of Toby Young's How To Lose Friends And Alienate People among other projects, said it intends to target investors in the UK, Continental Europe and Middle Eastern for the fund rasing.

Banks are tightening their credit agreements, making short-term mezzanine debt much harder to secure and making Aramid more attractive to producers. The fund argues that a combination of profitable returns during 2007 and the high profile productions it aims to finance will attract investors.

'From a producer's prospective, it's becoming harder and harder to achieve credit terms from the institutions,' the spokesman said. Aramid can step into the void with mezzanine finance using an asset backed lending (ABL) strategy.

He added that the Aramid fund is correlated to very few mainstream assets and outperformed the Lehman Aggregate Bond Index and Credit Suisse/Tremont Hedge Fund Index in 2007.

Full year returns exceeded 20 pct during a period when the fund was providing finance for 20 independent film projects.

Borrowers - film project managers - are able secure loans against soft assets such as IT or film stock with Aramid. Loans are also secured against tax credits, revenue participation rights, distribution rights; underlying copyright, sales contracts and other receivables.

Aramid hopes to achieve the 200 mln usd raising within six months.

It is currently fully invested with assets under management of 210 mln usd to date.

'Business is incredibly strong ... (and) there is scope for further fund raising to invest in projects deemed suitable', the spokesman said.

Aramid Capital Partner's CEO, Simon Fawcett has brought a wealth of 'clout' to the fund. Previously finance director of Pathe films, he played a part in financing both the Oscar winning film, The Queen, and Bend it like Beckham.

Regarding Aramid he said: 'With a strong pipeline of new business and the opportunity to diversify our portfolio through the provision of liquidity to television production houses, we are confident that the Aramid Entertainment Fund will continue to offer investors the opportunity to access genuine alpha returns outside the traditional markets in a low beta sector.'

The spokesman added that the fund is connected to a network of producers who are able to bring high profile deals to its managers; and 'it's also run by Tim Levy who has some 20 years experience of financing.'

Levy is the founder of FSA regulated Future Films Group which promotes the fund through its entity Future Capital Partners.

In addition to Fawcett and Levy, the rest of Aramid's management team comprise David Molner, the founder of Screen Capital and Thomas Adamek, the president of Stonehenge Capital.

The fund is currently providing finance for six films, including the Toby Young adaptation - three are in production and three in post production.

Aramid Entertainment fund is domiciled in the Cayman Islands and was launched in October, 2006. It is part of Aramid Capital Partners

By Ingrid Smith: +44 (0) 20 7422 4955; ingrid.smith@thomson.com.