With the return to normality caused by the advance of vaccination against Covid-19, artists such as Daniel, Leonardo, Raça Negra and Clothing Nova are already preparing to return to the stage with great performances. However, the profits won’t just go into singers’ pockets and their teams. Investors will also receive a portion of these amounts and are already excited about this new business opportunity.
“On the one hand, there are people who hope to go to concerts and have their lives normalized. On the other, the artists themselves are very eager to perform again. We are, therefore, at a strategic moment, in which we have good visibility of resumption of these events”, defends Filipe Mattos, head of special situations at XP Asset, to TV news.
In partnership with Opus Entertainment, the manager raised R$ 260 million in an investment fund in credit rights, known in the market as FIDC. This amount will be used to purchase concerts by major Brazilian music artists, which can be performed from two to five years, according to each contract.
This investment thesis began to gain traction in the Brazilian music world in recent months. For example, Gusttavo Lima sold, for R$100 million, his entire 2022 concert schedule to the For Even fund. XP Asset’s offer so excited investors that it managed to be the largest operation in the entertainment sector in the country in the last ten years.
“The reception was very positive, not only because the macro analysis makes a lot of sense, but also because we were able to bring a product with good returns, but low correlation with the investors’ portfolio.
It’s as if we were able to bring a product with a good level of profitability,” explains the executive.
From a thesis point of view, there are several risk mitigants, also because we did this with a partner with vast experience in the entertainment sector, Opus. The offer was closed, with R$ 260 million, due to a pipeline issue [ciclo de vendas] and that we are negotiating with other artists. If we have new operations within a period of four months, we will have to do with investors who have already invested in the fund, as they have preference. After four months, news can be opened to other investors, in an eventual new offer.
Although, how do you make money in this business? “There are two modes: resale of shows, with profitability tied to a gain within the price. Basically: ‘I bought for R$ 100 and sold for R$ 150.’ , box office and sponsorship, and other variables that involve the execution of these events. In this type of production, all the effective profit remains with the fund”, explains Mattos.
Beginning of relationship
The professional reinforces that this entry into the entertainment sector can also represent the beginning of a relationship with artists for future financial opportunities: “In addition to concerts, there is also the copyright or image segment. At the end of the day, this operation is entry into an unexplored segment by the Brazilian market, and which opens the way for other related areas”.
“Our objective is to support Brazilian talents, helping them with a boost in revenue and projecting Brazilian music, including abroad, with tours”, he adds.
The trend is for businesses linked to the entertainment world, harmed by the pandemic, to return with force. According to the 22nd Global Entertainment and Media Survey, carried out by PwC Brasil, this market share is expected to grow 4.7% until 2025, when it will move US$ 38 billion (R$ 197 billion).
“This moment is historic for the national artistic segment. We paralyzed our in-person activities during the pandemic, but at the same time, we doubled our digital performance with our own content and took the opportunity to build new products for the return to the stage. Music has become even more stronger in the current period and we are convinced of the role of entertainment in the lives of Brazilians”, points out Matheus Possebon, vice-president of Opus Entertainment.