As Moving Pictures revealed yesterday, an innovative adaptation of gap financing is to be launched in Australia this month, to raise around A$30 (US$19.2) million by the end of June, according to the newly created Macquarie Filmed Investments Pty Ltd. As the first of its kind in the world, the GreenLight Film Fund will invest in a portfolio of film and TV productions and will be open to Australian and foreign investors. It will not be limited to investment in "eligible Australian" projects with cultural imperatives which are supported by government agencies.

Chief Executive of Macquarie Filmed Investments (MFI), Bryan Lowe, told Moving Pictures that the GreenLight fund has been in development for some time, and Macquarie is confident it will raise the first stage target of A$20 (US$12.8) million to A$30 (US$19.2) million earmarked for productions shooting after July 1, 1999. Lowe expects to be "inundated" by projects from Australian producers and already has investors on stand by - even before the opening date. "The Macquarie GreenLight Film Fund is designed to invest in film and television productions anywhere in the world," Lowe explained. "It will be looking for the most commercial projects it can find, acting like a typical gap financier, looking for heavily pre-sold projects."

Spreading the risks

What is unique about the new GreenLight fund is that instead of investors being offered single projects, the fund will create a portfolio of high- potential film and TV productions, "thereby spreading the risk." Minimum investment will be A$500,000 in the GreenLight fund.

Macquarie will also operate a lending facility for investors with some tax advantages, but details of this are still being finalised.

Producers and financiers will see this as another major signal that Australia's film-making activity is actually turning into an industry. Although it is undoubtedly highly regarded, and is even referred to as an industry, it has to date been driven by government assistance and the imperatives of a national film movement. Even though the Film Finance Corporation (drawing on taxpayers' dollars) applies market force assessment to projects and would like to be operating at profit, the real motivation for investment is not purely commercial.

The new players and the new rules are changing things and Macquarie is just one of the commercial money players moving in.

The unveiling of the GreenLight Fund follows the announcement last month of a deal that sees newly formed April Films become the first Australian company with a formal US distribution pact for its 'approved' scripts. That means its productions get direct access to global distribution, but most importantly in the US. Considering it hopes to make three to five features a year in the relatively high A$8-A$20 (US$5.12-12.8) million range, April is ambitious - but has cause for optimism, according to its founder Klaus Selinger.

Selinger, whose background experience is in raising funds for international productions, has talked Universal into a proactive stance on Australia, convincing the studio to recognise that it could get in early instead of waiting for finished projects to float by its window.

The effect of this pact, if it manages to get the financial backing that Selinger relies on for it, will be enormous for Australian actors and crew, even if not all jobs are filled locally. The biggest impact will be the higher budgets, helping to propel films towards greater commercial potential, which in turn feeds further investment.

Another new player on the Australian scene is Munich-based MBP, whose director Rainer Mockert has already helped finance Cut, the first Australian horror film aimed at the youth market, now shooting in Adelaide, starring Molly Ringwald, with a special guest appearance by Kylie Minogue. Mockert is raising funds for other Australian projects and regards the market as ripe for international investment.

Meanwhile, Macquarie is also one of the two newly licensed FLIC scheme managers, and will be going to the market this month to raise the first of two A$10 million packages under the 10BA tax deductible investment regime; A$10 million is tax deductible in this and another A$10 million again in the following financial year. The combined total could reach A$60 million, said Lowe. While the FLIC licence is capped at $10 million for tax deductibility, the GreenLight fund is unlimited, and unlike the FLIC scheme, does not require the funded projects to be eligible as 'Australian' in content terms.

Content Capital, holder of the second FLIC licence, is also going to the market to raise its A$10 million prior to June 30, giving investors plenty of choice - and the FLIC scheme is also designed as a portfolio investment.

The sum total of these initiatives, coupled with the increase in big budget studio projects shooting consecutively in studios Down Under, is to propel Australia into the big league. Macquarie's enormous depth of experience in project financing and its hefty investor base brings tremendous authority to the film financing arena in a way that has never before been presented to investors.