In the UK, a new investment fund for theatre

The Financial Times' Arts Extra section, 6/5/11

Investors with a passion for greasepaint are being targeted by a new theatre production company with an innovative private sector financing model that comes as the [UK] government makes deep cuts to spending on the arts.  Impresarios Edward Snape and Raymond Gubbay, together with Luke Johnson, former chairman of Channel 4 television, will on Monday launch Fiery Dragons, a theatre production company that aims to raise initial working capital of 1 million. Unlike other theatre funding schemes, Fiery Dragons would ask investors to "spread the risk" by putting money into a range of productions rather than just one play or musical, Mr Gubbay said.  In return for their investment, shareholders would receive tax breaks through the enterprise investment scheme, invitations to first nights and - if the plays and musicals were profitable - a financial return.  Mr Gubbay said the funding challenges of austerity [in] Britain demonstrated the need for investment vehicles such as Fiery Dragons, adding that "necessity is the mother of invention".  A West End staging of the comedy thriller The Ladykillers, based on the classic Ealing Comedy film, due to open in December, will be produced by the company. Mr Johnson, chairman of private equity group Risk Capital Partners and a Financial Times columnist, said such schemes were not philanthropy by another name.  While conceding that the model was "high-risk, high-reward", he added: "I wouldn't do it if it wasn't commercial." Theatre lacks a rigorous commercialism that other sectors of the entertainment industry have already implemented, Mr Johnson said.  "Funding is on a very ad hoc basis. I'm interested in seeing the potential of a structured financing vehicle for theatre."


In Australia, a new investment fund for rare musical instruments

Sydney Morning Herald, 6/1/11

Musician Satu Vanska is frequently asked a question when she carries her violin case in public.  ''People say, 'Is that a Stradivarius?'''  Until now, she has laughed off such inquiries.  But with the Australian Chamber Orchestra's assistant leader poised to play a Stradivarius, she isn't sure how she will respond in the future.  The instrument, believed to be the only one in Australia, has been acquired through an innovative investment program set up to buy rare, high-quality stringed instruments that will be lent to the orchestra's musicians.  The Stradivarius, valued at $1.79 million, is the first purchase by the Australian Chamber Orchestra Instrument Fund and is a rare meeting of art, philanthropy and finance.  As an unlisted unit trust, the fund will mean a bigger pool of money available to buy rare instruments. [The fund's chairman] expects it will reach $10 million -- with a minimum entry of $50,000.  Rare musical instruments have proved to be strong investments. The global market for them is increasing, in part due to Asia's growing interest in Western classical music. A 1743 Guarneri del Gesu violin played by the leader of the ACO, bought by a benefactor in 2007 for $US6.6 million, has recently been valued at $US10.5 million.  Knowing the orchestra has a collection of fine instruments will help attract the best musicians, Vanska says.  ''If someone had told me 10 years ago I would be playing a Stradivarius on a full-time basis I would have just laughed,'' she says. ''It is a dream you don't dare dream.''


In Brazil, art price surge lures billionaires to new investment fund

Bloomberg News, 5/15/11

A Brazilian investment fund worth $24 million has attracted wealthy investors as the value of auctions of the country's art grows by as much as 38% a year.  The fund is the latest from the emerging 'BRIC' markets of Brazil, Russia, India and China to appeal to collectors. Brazil Golden Art: BGA Private Equity Investment Fund is part of the Rio de Janeiro- and Sao Paulo-based firm Plural Capital, which is putting money into Latin America's largest economy.   About 40 art funds were launched in the U.S. and Europe during the boom of 2005 to 2007. Since the financial crisis, the London-based Fine Art Fund, started in 2004, is the only one of these vehicles that has remained conspicuously active in the West. It currently has about $100 million under management after originally planning to raise as much as $350 million.   "There's a deep group of Brazilian collectors and there's been less speculation in that particular market," Philip Hoffman, chief executive of the Fine Art Fund, said in an interview. "We do have investors interested in Brazil."  The BGA fund is worth 40 million reais and will buy contemporary works, mainly from Brazil. Initial external investment for the new fund was 10 million reais short of the target capitalization, Bruno Miguel, an analyst at Plural Capital, said.  "The fund will spend three years investing, then two years uninvesting," Miguel said. "We may sell the whole collection to a museum or gallery. We'll see what the best option is at the time." 

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