Executive Summary An EIS Fund IRON BOX CAPITAL Film Investment Advisers
2 PARTICLE Introduction Iron Box Capital Ltd, an appointed representative of Sturgeon Ventures LLP, and Amersham Investment Management Ltd are delighted to offer UK taxpayers the opportunity to invest in a managed portfolio of independent film & television projects via the inaugural Particle Fund 1. A movie that costs only $1.6 million doesn t have to be a cultural event in order to turn a great profit. Steven Soderbergh (Ocean s Eleven, Traffic, Erin Brockovich) Overview The Particle Fund I, established under the Enterprise Investment Scheme ( EIS ), offers investors the opportunity to invest in an exciting portfolio of filmed entertainment projects. Chosen projects are vetted for commercial viability and are always profit-driven rather than purely tax-driven. This allows investors to participate in the financial upside of a non-correlated asset class through significant capital growth. Investment risk is mitigated by the expert oversight of the Iron Box Capital team, our robust project selection process, and our portfolio approach to film investing (in addition to the downside protection afforded by EIS tax reliefs). Our Principles Embody an Investor centred ethos. Offer a solution to investment challenges in an uncorrelated asset class, while using EIS tax reliefs for investor downside protection. Mitigate the risks presented by film investing and utilize best practice in order to meet client objectives. Actively manage the investment into a portfolio of individual companies, which have been selected under transparent best practice guidelines.
PARTICLE 3 Why filmed entertainment? Filmed Entertainment is consumed and enjoyed worldwide. As an exciting, dynamic and non-correlated asset class it offers appropriate investors a degree of portfolio diversification in a global market that was worth $89bn in 2015 alone (including theatrical box office, physical video, VOD, and TV). Global Theatrical Film Market $36 Billion in 2013 UK qualifying films $9.4 Billion in global box office 2015 Global Theatrical Film Market $38.3 Billion in 2015 Sources: PWC s Global Entertainment and Media Outlook and BFI.org.uk 18. Mar 2016 Why a managed fund? A managed fund offers investors access to projects that otherwise might not be available on an individual basis, and importantly, risk is spread across a range of assets. Investing in a managed fund has the benefit that projects are pre-vetted for their commercial viability by a highly experienced team that will actively Executive Produce each film. This selection process is guided by Iron Box Capital s established methodologies, qualitative & quantitative research and extensive industry network. All of this affords investors oversight and control via Iron Box Capital s management team thus increasing investor understanding whilst avoiding many of the common challenges associated with bringing filmed entertainment to market.
4 PARTICLE Why Particle? The Iron Box Capital team brings together a wealth of knowledge and proven track records in film development, production, finance & fund management. Business Model We will work with companies that are producing and/or exploiting commercial films & television content and that have HMRC advance assurance under EIS regulations. The fund will work with producers, distributors and sales agents that the team considers to have an excellent track record. Subject to our due diligence, Particle Fund 1 will potentially be the sole investor on projects. Particle Fund 1 s investment into each portfolio company will be assessed individually and will take into account all aspects of a project from financing an physical production through to successful commercial exploitation. COLIN BROWN The Chairman of Iron Box Capital, Colin Brown, is the former British Film Commissioner (2007-2011) in which role he was successfully tasked with bringing over $1bn worth of Hollywood Studio Productions to the UK annually. As a senior international media professional he has over the last 35 years been intimately involved with all aspects of filmmaking from creative origination to commercial exploitation and enjoyed that participation immensely. Also, Colin has held Board positions at the UK Film Council and National Film and Television School. RAIMUND BERENS CEO & founder of Iron Box Capital, Raimund Berens has been working in the media industry for over 15 years. Since 2005 he has concentrated on independent films and as Head of Production at Focus Films he gained invaluable insight into script development, budgeting, production management, international finance raising and legal structuring of independent feature films before joining Iron Box in 2010. DANIEL ANDERSON Daniel Anderson is a senior consultant at Iron Box Capital with an extensive trans-atlantic background in the media and finance worlds. A humanities graduate from the University of Cambridge, Daniel subsequently studied management as a Senior Thouron Fellow at the University of Pennsylvania before entering the world of financial management and fund advisory in Atlanta and Los Angeles. Product Selection Guidelines* Target Audience Production Team, e.g. Producer, Director, etc. Competitive Budgets & Fees Strong Sales Estimates Particle Fund I s weighted investment level Applicable Tax Incentives Distributor Pre-Sales Diverse slate within genre discipline Advisory Board: DEBORAH SHEPPERD Deborah is a highly experienced senior film marketing and distribution executive. Her company, Iheartcinema, was set up after she left Paramount Pictures, to consult for distributors, financiers and film makers in the UK and internationally, on various releases; she delivers industry training programmes in the UK and abroad for the NFTS, BFI, ICO and Inside Pictures, and is now developing her own slate of features. TOM HARBERD Tom manages the corporate finances of Bankside Films, a leading international sales agent, and oversees the operations of Head Gear Films, one of the UK s largest and most prolific film finance companies. He has participated in financing over 75 feature film and television productions, recently including Black Mass, Freeheld, War on Everyone, London Fields, Detour, Trespass Against Us, and The Man Who Knew Infinity. * This is a non-exhaustive subset of all guidelines utilised by the fund to determine commercial viability. Fund Manager Governance & Compliance Custodian Solicitors Taxation Advisor Amersham Investment Managmeent 47 Dean Street London, W1D 5BE Sturgeon Ventures LLP Linstead House, 9 Disraeli Road, London, SW15 2DR The Share Centre Ltd. Oxford House, Oxford Road, Aylesbury, Bucks HP21 8SZ Maclay Murray & Spens LLP One London Wall, London EC2Y 5AB Haslers Chartered Accountants Old Station Road, Loughton, Essex IG10 4PL
PARTICLE 5 Targeted Returns The fund has a target IRR of 15% and a Functional IRR 25% per annum. * The fund will seek to invest a diversified portfolio to help reduce potential variation from the target returns. Income Tax Loss Relief is available on qualifying EIS investments that fail. Recoupment Model * Taking into consideration income tax relief Capital growth will be sought through a profit-driven portfolio of carefully- selected investments of up to 5m. Investors Fund Return Instructions to custodian from Fund Manager (Amersham Investment Management) On exit from portfolio companies, Investors receive their share from the custodian Investment The Share Centre (Custodian) Companies selected, and are subject to due diligence, by Iron Box Capital, which becomes Executive Producer on all projects Company 1 Company 2 Company 3 Company 4 Paid to Companies Sales Agent Companies facilitate production and exploitation of film and TV projects Independent Collection Agent Sales Agent sells licenses/rights to individual territories worldwide on behalf of Companies Revenue from Distribution Distributor Cinema Release Home Video Broadcast Licensing Distributor pays revenue stream to independent collection agent Iron Box Capital will provide the fund access to validated commercial projects, each of which has strong market fit. Investor break-even and profits will not be tied to gross box office income. Rather, prior to box office release, revenue will be generated through sale of licenses on a business to business basis (from the sales agent to distributors worldwide). The fund s investment level into a given project will be informed by the value of pre-sales and the minimum sales estimates for unsold territories.
6 PARTICLE OFFER OVERVIEW We are looking forward to working with you. Please find some more particulars to our fund below: Minimum individual subscription 20,000 (or such lower amount as determined at the Manager s discretion). Target Fund size - 20 million. Minimum Fund size - 2 million (or such other amount as determined at the Manager s discretion). Initial Closing Date - 31 March 2017 (or such other date as determined at the Manager s discretion). Key Facts Particle Fund 1 is a discretionary managed service and is not a collective investment scheme for the purposes of FSMA. This means the Fund invests your money on your behalf directly into Companies Investment focus - EIS Qualifying Companies focused on film making and the provision of services in the making of films. Manager - Amersham Investment Management Limited. Key Tax Reliefs Income tax relief: 30% (EIS) up to 1,000,000 in Qualifying Investments per eligible UK tax payer per annum. 100% of this investment allowance can be carried back to the previous tax year. Capital Gains Tax: Under existing UK tax rules, provided the shares in an EIS Qualifying Investment are held for the Three Year Period from the date of the issue of shares in the Company, and income tax relief is not withdrawn, there is no CGT payable on any subsequently realised profits from the Investment. CGT deferral relief: The opportunity to defer capital gains realised three years before investment, or one year after investment, into a Qualifying Investment. IHT Relief: The value of investments in Companies held through the Fund for two years or more at the date of death of the Investor should qualify for IHT relief, which would reduce the IHT liability on a transfer of the Company Shares to nil, provided the Company continues to meet the business property relief conditions. Under current legislation, proceeds received on exit from the Companies can be re-invested into IHT qualifying companies to maintain the IHT free status. Please note that CGT deferral relief and IHT Relief are not limited other than by personal circumstances and time restrictions. The timing of income tax relief and CGT deferral relief is based upon the date that the Fund makes the Qualifying Investment and not when the Fund receives your Investment. The Key Tax Reliefs section sets out a very brief summary of the current UK EIS tax reliefs. Further details are set out in Part Six of the Information Memorandum. The value of the tax reliefs will depend on personal circumstances, which may change. References to tax are based upon current legislation and HMRC practice, which might be subject to change in the future. In addition, the availability of tax reliefs depends on the Companies maintaining their qualifying status. Please refer to the HM Revenue & Customs website for further guidance on the tax reliefs available on EIS investments or consult your tax adviser.
PARTICLE 7 Disclaimer: Where this communication constitutes a financial promotion/marketing communication it is issued and only made available to, and directed at, (a) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order ) or (b) high net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(1) of the Order (all such persons together being referred to as relevant persons ). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is only available to relevant persons and will be engaged in only with relevant persons. This is for professional advisors and their clients only and is not for Retail Clients. This is an Undertaking for an investment into an Enterprise Investment Scheme (EIS), which is deemed high risk due to its illiquidity. The information herein was obtained from various sources. We do not guarantee its accuracy. This information is for your private information and is for discussion purposes only. A variety of market factors and assumptions may affect this analysis, and this analysis does not reflect all possible loss scenarios. There is no certainty that the parameters and assumptions used in this analysis can be duplicated with actual investments. Any historical examples which appear are not necessarily indicative of future investments. Neither the information, recommendations or opinions expressed herein constitutes an offer to buy or sell the specified investment product. Foreign currencies denominated investments are subject to fluctuations in exchange rates that could have a positive or adverse effect on the investor s return. Unless otherwise stated, any pricing information in this presentation is indicative only and is subject to change. Prior to undertaking any investment, you should discuss with your professional tax, accounting or other adviser how such a particular investment(s) affect you and whether it is suitable. All analysis (whether in respect of tax, accounting, law or of any other nature), should be treated as illustrative only and not relied upon as accurate. To receive the information memorandum and application form, and for more information about our fund, please don t hesitate to contact us: Raimund Berens raimund@ironboxcapital.com Tel: +44 (0) 207 628 7857 Mob: +44 (0) 7528 616 752
IRON BOX CAPITAL Raimund Berens 8 City Road, London, EC1Y 2AA, UK raimund@ironboxcapital.com Tel: +44 (0) 207 628 7857 Mob: +44 (0) 7528 616 752 Iron Box Capital Ltd. is a company registered in England. Reg: 9321984. VAT number: 207 9779 66. Registered address: 8 City Road, London, EC1Y 2AA, UK.