Hemisphere Capital Raises $100 Million in New Funding, Will Back Sony's 'Smurfs 2' (Exclusive)
Hemisphere Capital Management, one of the more active providers of private equity financing to Hollywood movie studios, has raised an additional $100 million from a group of banks and is negotiating to cover part of the budget of Sony's Smurfs 2, sources tell The Hollywood Reporter.
The new round of financing, which could foretell more Hollywood investments by Hemisphere, closed two weeks ago. A formal deal to come aboard as a Smurfs 2 financier is expected to close soon, according to sources close to the negotiation.
The Hemisphere Tentpole Co-Financing Fund, which provided part of the budget for last summer's The Smurfs, is a revolving equity and debt fund created in 2011 to co-finance big budget movies by partners Jean-Luc De Fanti, Jeff Sagansky and Eli Baker. It initially raised at least $200 million from an international group of funding sources and is an investor in Men In Black 3, which opens next week, as well as the upcoming Paramount movie World War Z, which stars Brad Pitt (and also has funding from David Ellison’s Skydance).
While there are several funds that have partnered in recent years with major studios, typically providing up to half of a movie's financing, Hemisphere stands out because its strategy is to only invest in movies with budgets over $100 million that have stars and are being distributed by major studios.
In an announcement last year, De Fani said this strategy allows the company to “invest in significant global tentpole pictures with the highest caliber of talent and filmmakers.”
The latest $100 million was raised from a group of banks led by J.P. Morgan Chase’s Entertainment Group. J.P. Morgan is Hemisphere’s debt financing partner.
In addition to the main fund, Hemisphere also manages mezzanine and special opportunities funds, which had previously operated as Winchester Capital. Their focus is on media, film and TV investments.
Hemisphere's first deals were with Sony and Paramount, but the company has been seeking opportunities to work with others. De Fanti and Baker are currently at the Cannes Film Festival looking to invest in other big movies. They said last year that the company's aggregate investment in the first four pictures financed with those two studios “exceed $200 million of capital commitments.”
Hemisphere appears to have made a nice profit on the Smurfs movie, which grossed more than $560 million worldwide. The sequel is scheduled to hit theaters in August 2013. Hemisphere also was an investor in The Adventures of Tin Tin, which did not provide a big return but did not lead to a big loss either, according to a source.
Hemisphere’s original group of strategic investors include Toho-Towa Company and Kadokawa Shoten of Japan and Lotte Cinema of Korea.
Hemisphere said last year that its mezzanine and special ppportunities funds since 2007 have made “successful” investments in the past with MGM/UA, Europa Corp., Senator Entertainment AG and selected independents.
A spokesperson for Hemisphere on Friday declined to comment.