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Ingenious goes live

Ingenious Ventures, the private equity arm of specialist media finance business Ingenious Media, is looking to raise up to £25m each for the Ingenious Live VCTs 1 and 2.

Ingenious Ventures was founded in 2000 and has invested in the entertainment industry through limited partnerships and two music VCTs.

The new VCT will invest in a portfolio of event companies involved in live or interactive events. The events are likely to be held mainly in the UK and may include concerts, festivals, exhibitions, theatrical shows, conferences, trade fairs and sporting events.

Companies in the portfolio will typically be newly formed companies, funded principally by the VCTs. Each company within the portfolio will benefit from the services of an experienced promoter through either co-promotion licensing or sub-contracting arrangements.

They must have performance warranties or similar contracts in place to provide that the revenues they will receive from the events will equal 70 per cent of the investment made by the VCT. This is designed to lower the risk for investors as it secures a minimum revenue stream.

The majority of the initial capital invested in each company will be provided through a loan, which should also help to lower the investment risk. If deemed appropriate, the event companies will be expected to produce or promote further productions of events on similar terms, so as to maximise the returns from successful events. Each of the VCTs has the flexibility to retain up to 30 per cent of its assets in cash and cash equivalent instruments.

According to the directors, the UK live entertainment market represents a good investment opportunity because quality events featuring quality performers are in demand. The directors note that advertisers are also tapping into the live events market, as demonstrated by the recent trend in music festivals sponsored by mobile telephone operators.

Future growth within the market is expected to come from the build-up to the 2012 Olympic Games and from growth in technology, which will enable events to be viewed in different ways and boost revenue.

However, to comply with the VCT rules, companies with assets of more than £7m will not qualify for investment. This forces all VCTs to focus on smaller companies with higher risk profiles.

The cancellation of events, the unavailability of key artists or the loss of the venue hosting the event are also risks specific to this VCT, but these have been mitigated by requiring event companies to have insurance in place to cover such risks.

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