City Editor Neil Martin talks to Great Point Media’s Commercial Director Dan Perkins, to find out how 2018 was for them and what beckons for 2019.
It’s all too easy to forget that some of the top dramas you will have seen recently on television and cinema screens require funding, and that to achieve success in the area of raising finance for entertainment content, is no mean feat. One firm that leads the way is Great Point Media. To date, its senior management team has produced, financed and distributed over $2 billion of entertainment content, and has over 300 production credits in film and television collectively.
Given its long and successful track record, it’s a surprise to learn that the Great Point Group (to include both the parent Great Point Media (GPM) and their FCA regulated subsidiary Great Point Investments (GPI)) is just six years old, having been established in 2013 by media industry stalwarts Jim Reeve and Robert Halmi, together with a highly experienced team of media focussed EIS professionals.
Dan Perkins, Commercial Director and a “Big Four” trained chartered accountant, heads up the Great Point Group’s intermediary sales team having spent the past 10 years of his career managing alternative investments and working with UK based financial advisers to help educate investors and promote the best EIS, SEIS and BR qualifying opportunities the market has to offer in the media sector.
Great Point Investments
GPI is the FCA regulated subsidiary of GPM. It offers a strong and unique track record in the management of EIS qualifying media companies. At the time of this interview, the Great Point Group manages and advises around £224 million of EIS and SEIS qualifying capital across more than 130 separate businesses with over 2,800 unique investments. More than 170 financial intermediary firms have introduced their clients to its funds, including some of the UK’s largest private banks and IFA networks.
I begin by asking Perkins, how was the year that’s just been and gone?
“It was a busy year on many fronts, with television production activity continuing apace across all of our live Select Television Production offers. Well-received shows aired during the year include Kiri’ (Channel 4), ‘Lear’ (BBC / Amazon), ‘Save Me’ (Sky) and ‘The Cry’ (BBC).
We also closed out our biggest single fundraise of £70 million at the beginning of the year and have been busy deploying funds with a number of projects produced by our investee companies recently airing include ‘Manhunt’ (ITV, 9pm 6, 7, 8 January, currently available on the ITV Hub) and ‘Brexit’ Channel 4, 9pm 7 January, currently available on All 4) starring Benedict Cumberbatch.”
GPM considers it has a number of USPs which marks it out in the sector. Not least is its unrivalled media sector knowledge, and network of industry relationships and strategic partners. Added to this is the proprietary deal flow and a number of ‘first look’ deals it has with industry bodies and leading institutions. There is also the firm’s broad investment approach which is designed to create diversification for investors, rather than create unnecessary concentration risk by focussing too heavily
on a particular sub-sector of the creative industries. Finally, and almost most importantly, there is the unique blend of financial, operational, commercial and investment management experience specific to the media sector that the team brings to the table.
GPM has a unique blend of financial, operational, commercial and investment management experience specific to the media sector.
Perkins expands on the developments that came in 2018.
“Whilst we have been busy deploying monies raised under previous investment strategies, we also spent a large part of 2018 developing our current investment opportunity, Great Point Ventures EIS, which looks to embrace HMRC’s ‘Risk to Capital’ conditions by taking a more growth focused venture capital approach to investing in the UK creative industries.
“As part of this development process we have recruited a new Head of Legal, Taryn Strong, who was previously at Channel 4 where she advised the broadcaster on their Commercial Growth and Indie Growth Funds. We have complemented this hire by adding four highly experienced consultants to the team that bring a wealth of media M&A and venture capital experience to the table as well as an enviable list of industry contacts and relationships.
“We are also launching our new IHT service, Great Point Estate Planning, this month. It looks to build on the excellent trading performance of one of the underlying investee companies, Illium, which we have raised capital for and managed over the past three years as a standalone entity.”
We move on to discuss the firm’s specialism.
“Our area of expertise is media. Whilst the financial services sector often grabs all the headlines in terms of regularly being the biggest contributor to the UK economy, it is a lesser known fact that the creative industries have made a record contribution to ‘UK Plc’ in the past few years and have grown at twice the rate of the wider economy, now representing over 5% of UK gross value added and generating a huge £91.8 billion a year for our domestic economy.
“In addition, between 2010 and 2016 the economic contribution of the creative industries has grown by over 44% and now employs almost two million people nationwide. When you consider these statistics alongside a growing global population consuming more entertainment media than ever before and a backdrop of corporate behemoths such as Amazon and Netflix reportedly spending a combined $13 billion on content in 2018, you can start to understand why we, and several other investment managers, believe the sector currently presents huge opportunities for growth focussed, long term investment.
…behemoths such as Amazon and Netflix reportedly spending a combined $13bn on content in 2018…
I then ask Perkins about his views on government’s recent changes to EIS.
“Whilst the cynical minority in the industry may have considered the implementation of the ‘Risk to Capital’ conditions by HMRC earlier in the year as the death knell for media- based investing in the UK, given the way the changes have been embraced by the media investment community and others with a more general investment remit, quite the opposite is true.
“There is a plethora of media based businesses with significant growth plans out there – the new rules aim to direct investment into those entrepreneurial businesses seeking to innovate and disrupt, and ensure investors that put themselves ‘on risk’ when investing are rewarded with potentially significant returns whilst at the same time afforded the downside protection that the generous tax reliefs available under the EIS provide. Change is what you make it – it can be seen as a threat or an opportunity for someone to make a difference. The UK creative industries are well positioned in uncertain economic times to take on the challenge and drive real value for all stakeholders long into the future.”
So, will future government changes impact EIS effectiveness?
“Under the current government we would not foresee any significant future changes to EIS, given the introduction of the ‘Risk to Capital’ conditions in March 2018 and the effect that has had on the market in terms of re-focussing capital to businesses targeting growth over the longer term.
“In our view, the key to ensuring the continued effectiveness of the EIS is keeping things as simple
as possible for the investor and their advisers. A slight concern we have with the introduction of the ‘Knowledge Intensive EIS’ wrapper, for example, is that it adds complexity to an already complex market – our view would be that given the effect the introduction of the ‘Risk to Capital’ conditions has had, maybe the benefits of investing in a knowledge-intensive EIS should simply be rolled out to all EIS qualifying companies, thus maintaining a level playing field for all budding UK entrepreneurs.”
Diversifying Client Portfolios
Can EIS investments continue to help diversify client portfolios?
“In recent times, the EIS investment world has become quite “tech” focussed, which does pose an interesting dilemma for your typical IFA – ‘Even if I diversify my client’s EIS portfolio by manager, am I really diversifying their underlying portfolio of investee companies in terms of sector exposure?’
“As a result, an opportunity such as Great Point Ventures EIS, which is very much focussed on the booming UK creative industries, could prove to be a very useful tool for advisers in terms of mitigating risk through a well-diversified investment portfolio at both a manager and sector level.”
My final question on process centres on how can advisers continue to educate their clients about the investment opportunities in EIS?
“By engaging more with industry bodies such as the EISA which is making a real effort to increase engagement with the intermediary community through events such as their ‘Effective Financial
Planning’ seminar which we sponsored in December. Managers are also far more amenable to hosting CPD qualifying events for advisers and educational workshops for investors, which we would very much encourage attendance of.
“Equally, investment platforms such as GrowthInvest, research tools such as MICAP and industry focussed publications by Intelligent Partnership/GBI have really helped in terms of giving advisers and investors a more ‘whole of market’ view and a real insight into the vast array of opportunity out there.”
We finish by looking to the year ahead.
“The outlook for 2019 is positive – HMRC’s ‘Risk to Capital’ conditions have accelerated our launch plans for a heavily growth focussed media EIS (Great Point Ventures EIS) and in response to the huge array of lending opportunities our industry presents us with we have decided to launch a new BPR qualifying investment service, Great Point Estate Planning, in January – following on from the commercial success of our previous single company offering, Ilium, over the past three years.
“Finally, over the past two years we have been looking at ways to expand and diversify our business into the non-tax advantaged investment space. We are delighted to report that we are scheduled to close a $50 million equity fundraising round at the end of January which will focus on venture capital investing into media focussed businesses predominantly in the US, with our first investment opportunity in the ‘media facilities’ sub sector already lined up. This launch is particularly exciting for us and should create investment synergies for the UK focussed Great Point Ventures EIS in the future.”
So, when you next watch a quality programme or film, you might just have the Great Point Group to thank for helping get it to our screens.