In its pursue to niche strategy in the private debt asset class, Decalia has identified an under-served financing segment in the fast-growing film production market, which offers the potential for uncorrelated downside protected equity-like returns with annual cash distributions. The strategy lends capital to medium budget ($10m-$40m), English-speaking independent film productions, through three types of debt tranches. These offer protection through collaterals and seniority in the capital structure, without exposure to the sales performance of films.
"We are witnessing an extraordinary growth of private markets worldwide, which have gone from alternative investment practices to mainstream strategies for a large base of investors," explained Nicolo Miscioscia, head of Private Markets at Decalia AM.
"In the video content production market we were observing a very interesting double dislocation: on the one hand, the increased demand for film and TV series, supported also by new distribution platforms such as Amazon and Netflix, and on the other hand, the structural gap in production financing deriving from the lack of specialization of traditional lenders. When such conditions exist, we typically visualize opportunities to extract asymmetrical risk-adjusted returns," added Miscioscia.
Since inception, Decalia Private Markets has launched several innovative strategies such as, among others, hybrid financing to European SMEs, asset-backed lending, private equity co-investments, growth capital in specific markets and specialized real estate. Decalia Private Markets has the objective to launch 3 to 4 projects by the end of 2020.