Important Information

The investments referred to in this website are not suitable for all investors. Calculus Capital Limited is not able to give advice to prospective investors about the suitability of the investments. Prospective investors are recommended to seek specialist tax and financial advice before investing in any Calculus EIS Fund, including the UK Creative Content EIS Fund.
An investment into a Calculus EIS Fund may only be made on the basis of reading in full the information set out in the relevant Information Memorandum.
When investing in the Fund, your capital is at risk. The value of shares and income from them may go down as well as up and despite the tax relief you may not recover the amount originally invested. An investment in smaller and unquoted companies carries a higher risk than many other forms of investment. Shares in unquoted companies are not readily marketable. You should not invest in an EIS unless you can afford to lose some or all of your capital.
An EIS investment is only appropriate for investors with a medium to long term investment horizon; the timing and extent of realisation cannot be predicted and may extend beyond five years. It is not possible to allow a partial withdrawal of your investment. You may request a total withdrawal, but since many investments made by the Fund will be in unquoted companies, this may not be possible. Withdrawal within three years would lead to repayment of any tax reliefs received.
The tax benefits available depend upon your individual circumstances and these benefits may change dependent upon future legislation.
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The still images and clips of films and television programmes used on this website do not form part of the UK Creative Content EIS Fund, and their use should not be interpreted as examples of prior investments made by any of Calculus or Stargrove. The images are used to demonstrate well-known content produced historically by UK screen content companies.

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UK Creative Content EIS Fund

A new era of investing in the UK creative industries aligned to the Government's objectives for EIS

The UK is a global force in creating content for the screen industries, with world-class infrastructure and talent. UK creative content companies have an established track record of producing award-winning, commercially successful films and television shows watched by millions worldwide, and are ideally placed to benefit from this growth in content expenditure.

The UK Creative Content EIS Fund will invest in a diversified portfolio of growth orientated UK creative content companies, capitalising on  the unprecedented growth in demand.

Calculus has been at the forefront of investing in UK growth companies for twenty years. We are committed to investing in the spirit of the EIS legislation and are pleased to partner with Stargrove Pictures for the UK Creative Content EIS Fund. The team brings experience, industry connections and knowledge.

There has never been a better time to create, own and invest in UK content.

Call or email for an Application Pack: 020 7493 4940 info@calculuscapital.com

The Fund is now OPEN

Next Close Date - 25 October 2019
Subsequent Closes: 31 January 2020, 24 April 2020, 26 June 2020

Information Memorandum

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Key Information Document

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Key Features & Benefits

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The Opportunity

A highly competitive landscape has led to an unprecedented global demand for original content

Technology is changing the way we consume creative content, evidenced by the significant growth of subscription video-on-demand (SVOD) services such as Netflix and Amazon. Together with more traditional broadcasters and distributors, this has created a highly competitive landscape and an ever-increasing global demand for exciting original content.

Netflix is reported to have a total budget of around £7billion for 2019, but some sources indicate that it could be substantially higher. Amazon is estimated to spend around £3.9 billion on screen content. Both Apple and Disney have announced the launch of competitor services in 2019, with WarnerMedia to follow imminently. Facebook and Google are already commissioning original content and may increase their commitment in the face of strong competition.

These SVOD services compete for content with traditional TV broadcasters, film studios and distributors, who have ramped up their budgets to keep pace with the new entrants.

The UK is a global force in creating content for the screen industries, with world-class infrastructure and talent. UK creative content companies have an established track record of producing award-winning, commercially successful films and television shows watched by millions worldwide, and are ideally placed to benefit from this growth in content expenditure.

Box office successes such as Paddington, Slumdog Millionaire and Mamma Mia and internationally successful television shows such as Downton Abbey, The Crown and Call the Midwife demonstrate the global appeal of content created by UK companies.

The total spend on UK high-end television and film production in 2018 reached £3.1billion*. With Netflix and Amazon ramping up their activities in Europe, and Apple now in the market for original content, we are anticipating expenditure to rise for UK based productions over the coming years.

The increasingly competitive market for creative content has, in turn, driven an increase in M&A activity for content creation companies, providing exit opportunities for investors.
For strategic buyers, this activity is largely driven by a desire to own and control content, a key differentiator in this landscape. Screen content M&A activity more than doubled between 2013 and 2017. In terms of the number of transactions, the UK was the most active M&A market, and high quality TV drama was a significant focus.

Alongside traditional private equity players, the range of buyers in recent years includes ITV, Freemantle Media, Sony, Sky, EOne, Channel 4, Endemol Shine, All3Media, NBC Universal
and Vivendi/StudioCanal.

The unprecedented level of demand for quality content and the consequent increase in M&A activity underlines that there has never been a better time to create, own and invest in UK content.

The Fund will invest in a new generation of EIS Qualifying UK companies best placed to capitalise on this global demand for content. The Fund will support their innovation and growth and enable them to retain a meaningful interest in their intellectual property as they scale up.

Investment Strategy

The Fund will look to generate attractive returns for investors by sourcing investment opportunities in UK content companies which demonstrate the potential for long term growth.

The Fund will support the growth of sustainable and successful UK content creation companies developing, producing and exploiting ambitious and commercial creative content. Investment will enable these UK content creation companies to grow and retain the financial benefits from the successful exploitation of their IP.

Each investor in the Fund will hold investments in at least six content creation companies targeting a broad range of genres, always focused on creating market driven commercial film, TV and game content at prudent budget levels. Concentration risk mitigation and exit value enhancement will be achieved through a cross-platform content strategy including TV, streaming video on demand (SVOD) and other platforms in addition to theatrical features.

The Fund will have a strong commitment to investing in companies that recognise the social imperative and market opportunity in encouraging diversity and inclusion. The Fund and the companies in which it invests will work to the BFI’s Diversity Standards.

Calculus employs a tried and tested toolkit to support its Investee Companies. Stargrove will also bring its industry experience and connections to help grow each of the content creation companies invested into by the Fund.

Investment Process

Successful investment is about far more than providing the initial capital; we work with our investee companies to help them develop their full potential.

Deal flow

  • Investment opportunities will be sourced through Stargrove’s network of industry contacts and relationships
  • Stargrove is a leader in its field. The team has impeccable global industry connections

Due Diligence/Documentation

  • Our detailed due diligence process normally takes about 4 months, using external experts (legal, financial and management)
  • Detailed references from industry partners, a review of track record, analysis of existing revenues, costs and working capital requirements, assessment of viability of business plan and key legal documentation
  • Investments will be subject to an Investment Agreement setting out the terms of the investment together with new contracts of employment for key personnel
  • Each Investee Company will have received advance assurance from HMRC prior to investment

Investment

  • Each Investor in the Fund will hold investments in at least 6 content creation companies targeting a broad range of genres
  • Monies will be deployed over a target 15 month time horizon from the tranche close date

Post investment monitoring

  • Calculus employs a tried and tested toolkit to support its Investee Companies, this includes: formal monitoring, appointment of an Investment Director to the board, toolkit for Investee Companies including 100 day planning, executive coaching, support and guidance in such areas as operations and processes, legal, marketing, business development and finance
  • Stargrove will also bring its industry connections and experience and will support Investee Companies by attending board meetings, connecting the management with its network of financiers, talent agents, sales agents, distributors, executive producers and potential production partners, advising on the viability of finance plans and advising on key deal points in commercial negotiations

Exit opportunities

  • Exit opportunities are monitored on a continual basis. Calculus has extensive M&A experience. Exit may be in the form of trade sale, capital reconstruction, sale through refinancing by a larger private equity house or IPO.
  • We will target an exit within 4-6 years of the investment; the minimum holding period for EIS tax reliefs is 3 years

Exit Strategy

Once an Investee Company has established a successful track record, we will look to exit the investment at a time where we can realise maximum value on behalf of investors.

Calculus has experience of all possible exit methodologies for UK growth companies. The main exit routes are:

• Trade Sale – the demand for high-quality content has driven increased demand for the ownership of, and/or investment in, content creation companies. This has created an active M&A market for successful content companies

• Refinancing by a larger private equity house able to help ambitious companies scale faster

• Capital reconstruction by the refinancing of projected future revenues and subsequent reduction of capital

The demand for high-quality content has driven increased demand for content creation companies, particularly within the high-end TV production sector in the UK. Content ownership has become vital, and this has created a very healthy M&A market for successful content creation companies.

This activity is driven by strategic imperatives as much as immediate financial returns, as the SVODs and broadcasters compete and the upper end of the content industry looks to consolidate. We believe this creates attractive exit opportunities for investors.

Television content producer M&A activity more than doubled between 2013 and 2017. In terms of number of deals, the UK had the most active M&A market from 2013 to 2017.

The market for production companies is deep and varied, increasing the exit opportunities available to investee companies. Alongside traditional private equity players, the range of buyers of, and equity investors in, UK content production companies include ITV, Freemantle Media, Sony, Sky, EOne, Channel 4, Endemol Shine, All3Media, NBC Universal and Vivendi/StudioCanal.

This type of activity is likely to continue, driving further competition in acquiring premium producers to secure content ownership and creating further exit opportunities for investors.

Key Risks

This Fund may not be suitable for all investors. Potential investors are recommended to seek independent financial and tax advice before investing. Please note that Calculus Capital is not able to provide you with advice about whether you should invest in this Fund.

Tax Reliefs

The UK Creative Content EIS Fund takes advantage of the generous tax incentives currently offered by the Treasury and HM Revenue & Customs for investment in smaller UK companies

Income tax relief at 30%

Income tax relief at 30% which can be taken in the tax year the Fund makes its investments or carried back to the previous tax year

Tax free capital gains

Tax free capital gains on the investments within the Fund

Full capital gains tax (CGT) deferral

Full capital gains tax (CGT) deferral of tax due on other capital gains for the life of the investment

Loss relief

Loss relief which can be taken as a deduction against income or as a capital loss (giving a total tax relief up to 61.5%* when combines with initial income tax relief)

*assumes a higher rate tax payer

Full inheritance tax relief

Full inheritance tax relief provided the investments have been held for two years and are held at time of death