NV Capital, founded by former investment bankers Nitin Menon and Vivek Menon-Co-Founder &Managing Partner, claims to be the first credit fund for media and entertainment sector. The fund has received Sebi nod as a Category-II Alternate Investment Fund, and will invest in content creators, OTT (over the top) platforms, gaming and entertainment start-ups.
Nitin Menon-Co-Founder & Managing Partner, and Vivek Menon Co-Founder & Managing Partner, N V Capital, share details and plans for the Fund with Sulekha Nair.
Excerpts from the interview
Can you share the details of the new fund launch? Is this the first media and entertainment fund in the country?
NV Capital is India's first Media & Entertainment SEBI-registered Credit Fund. The objective of the fund is to pursue debt investments in the content & entertainment startup space. The fund is close-ended. The duration of the fund is 4 years from final close with a quarterly interest payout to the investors.
What kind of returns investors can be expected ?
The gross internal rate of return (IRR) from the investments are expected to be in the range of 20 percent.
Globally, how big is the media & entertainment fund industry?
In US, debt investments in the filmed entertainment space has been an established norm starting with banks with early movers like Dresdner (acquired by CommerzBank), JP Morgan etc, and Alternative financial institutions like Caryle among others providing capital with lucrative rates of interest. The combined pool of capital that is managed by financial institutions only in Content finance at any point of time could be north of $10 billion.
Despite Bollywood being such a huge market, why didn't we see any such debt fund being launched?
Though the formation of the industry has opened the doors to organized capital, the sector has faced its fair share of issues given that the industry was still fairly unorganized till late 2000. The market wasn’t ready for a fund as the number of monetization sources of a project was also very limited as compared to the present day. Add to this, being an intangible asset class industry, it wasn’t easy for any financial institution to understand this space and they were only comfortable with tangible assets which were traditional brick and motor industries. Further, debt funds as a product has recently picked up pace over the last 3-4 years through the AIF route in the form of Real Estate and Venture debt funds.
Besides media & entertainment, is N V Capital looking at raising debt funds for any other sector going ahead?
Currently the focus is only on the media and entertainment sector and specifically on the content universe and entertainment startups.
Will you be investing in some of the notable OTT platforms like Amazon, Netflix, Hotstar or Sony Liv for content?
Entertainment platforms that cater to short form or long form content as well as gaming companies are a focal area for NV Capital.
Do you expect big-budget web series on OTT platforms going ahead since this is the platform which has garnered lots of eyeballs in the pandemic?
Yes, we will be seeing more of this going ahead. Smartphone adoption and digital connectivity have constantly added a profusion of subscribers and aiding the growth across the OTT ecosystem whether it is short form, long form or audio content. With this content explosion continuing its double digit growth trajectory, capital formation is an integral and essential component in taking the industry to greater heights.
Can you throw some light on the gaming platform and how much are you targeting to invest in the coming years?
Even companies like Netflix have entered the gaming space. Companies like Dream 11 have been one of the earliest movers in the space and have grown exponentially over the last few years. Whether it is Fantasy sports, Real Money Gaming companies, Casual Gaming or E-sports, the gaming industry is growing at a scorching pace and this momentum will continue in the foreseeable future especially after the IPO of Nazara. While we cannot quantify an amount, NV capital will actively be pursuing investments in this space.
How do you ensure safety of capital?
Given the increasing monetisation pie from OTT and other electronic platforms, the capital in play is secured through these monetisation platforms as the IP and all the underlying rights are completely secured and charged to NV Capital.
Do you expect more funds to come in over the next 12-18 months given the rapid growth of the industry?
Yes. Since content financing is a very prevalent practice in the West, we believe that the same model will evolve in India as well since we are one of the biggest markets for content manufacturing. Looking at this trend and with the unprecedented growth of content, there would be dedicated funds catering only to this industry.
Why should someone invest in NV Capital?
The founders have over 20 years of combined experienced of successfully financing projects in this space The sponsor Jayantilal Gada, Chairman & Managing Director of Pen Studios, adds substantial value with his 30+ years of experience in the Media & Entertainment Industry. We are introducing content financing as a new Alternative Asset Class as this is already a tried and tested model in the West. Since this market is largely untapped in India and investors are looking at various alternative asset classes to invest in, the returns commensurate to the capital from the fund is substantially higher for a fixed income product. It also opens up other opportunities to the investors, like co-investments etc, to jointly participate alongside the fund.