Prosper and Act tread the boards with theatre EIS
The theatre fund is an enterprise investment scheme that aims for growth by investing in a portfolio of four to 12 West End theatre production companies.
The fund brings together the financial expertise of Prosper Capital, a specialist in services to tax efficient funds and Act Productions, a theatre producer of West End and Broadway theatre productions. It has produced a range of shows including Dirty Dancing, Legally Blonde, Wicked and Singin’ in the Rain.
West End theatre is more commercial and appropriate for investment than regional theatre, which is mostly government subsidised. Act Productions says the sector has been resilient during the difficult economic environment, with attendance and revenues growing consistently over the last seven years. This is supported by data from the Society of London Theatres which shows more than £14m people attended theatres with box office theatres taking over £512m.
The EIS comprises different types of production that will run at the same time, rather than one running after another, as it is intended to almost track the West End theatre business as a whole. This differentiates the EIS from traditional private investment where theatre investors, known as angels, put all their eggs into one basket through a single production.
The tax advantages of the EIS structure provide another distinction, along with higher returns than traditional theatre investments, such as a 70 per cent of the profits compared to the usual 60 per offered by traditional theatre investments. Investors will also get 70 per cent of royalties that are usually retained by the producer.
To reduce risk, the EIS will not invest more than 50 per cent of the money it raises in any one production and it will not provide more than 50 per cent of the working capital for any single production. However, theatre investment can still be higher risk and shares will need to be held for at least three years.