Los Angeles: Last September, when Sanjay Sanghoee set about turning his first novel into a Hollywood movie, the budding film-maker had his pick of investors.
The novel, Merger, a corporate thriller with an international espionage twist, was quietly published in 2005. Sanghoee saw the movie version as a $5-7 million (Rs21.3-29.82 crore) indie with broad appeal, maybe attracting a star like Jake Gyllenhaal.
But so many hedge funds and private equity investors wanted to sink money into the project that Sanghoee, himself holding down a day job at a New York hedge fund, pushed the needle higher. Soon the budget had tripled to $15 million. In October, he decided against a fund-raising trip to Dubai. “We don't even need it now,” he said at the time. But that was before Wall Street's mortgage mess, tight credit markets and the sour economy. The torrent of private money flowing into Hollywood slowed to a trickle. Sanghoee is now panning for gold in a very different stream.
Sanjay Sanghoee’s ‘Merger’, a corporate thriller with an international espionage twist, was originally budgeted at a modest $5 million
Investors for Merger have either slammed on the brakes or disappeared. A fund in Atlanta weighing a $7.5 million investment has cut back by $3 million. A $5 billion hedge fund group that was supposed to handle debt financing now has other priorities, namely liquidating 80% of its holdings.
“Things have gotten a bit hairy, and unexpectedly so,” Sanghoee said. Sanghoee has been caught in the lurch of an uncertain economy and nervous lenders as private money has become harder to obtain.
But rather than giving up, Sanghoee, a balding 35-year-old, is overhauling his financing plans and retooling his pitch to investors. From the start, he knew what to name his production company: Relentless Pictures.
In 2005, when a division of Macmillan published Merger, Sanghoee (pronounced SANE-go-ee) had a decision to make: try to option the film rights to a producer or seek investors to make a movie himself.
Sanghoee, a corporate worker, was a little bored. He left India in 1991 to attend Columbia, where he earned a degree in computer engineering and a master's degree in business administration. Over the next decade, he worked various financial jobs on Wall Street.
In 2005, Sanghoee worked at Ramius, an $11.5 billion Manhattan hedge fund. At night and on weekends, he worked on his book and wrote spec scripts for episodes of Law and Order. None were ever made.
He also had a front-row seat as hedge funds looked to Hollywood as a place to park money. Ramius decided in 2006 to start reviewing film financing deals to push into movie investments, tapping Sanghoee to lead the effort.
Sanghoee landed in a boomtown. More than $12 billion was flowing into 150 movies, according to trade estimates.
Ramius ultimately decided to take its toe out of the water but Sanghoee saw an opening. With a novel and a Rolodex full of hedge fund and Hollywood contacts, he would make a movie himself.
In mid-2007, he started calling contacts. One call went to Jai Khanna, a manager at Brillstein Entertainment who had read Merger and responded favourably. “I saw the story as really commercial,” Khanna said. He connected Sanghoee with a fledgling screenwriter, Neeraj Chaudhury, and they wrote a script.
Merger is the story of an Indian corporate titan who begins a hostile takeover of a satellite company that transmits information from the CIA. A New York investment banker working on the deal smells something fishy and turns to a former girlfriend, a brassy newspaper reporter, for help. The corporate titan, it turns out, has pictures of the owner-operator of the satellite firm having sex with young boys. As the banker and reporter race to uncover the plot, dodging assassins in the process, a bigger evil is revealed: The Indian businessman plans to sell CIA secrets to an Arab terrorist.
With a script in hand, Sanghoee started chatting up hedge funds. A typical pitch occurred in a phone call on 3 November with a principal at a private equity firm based in Connecticut. The firm, the principal said at the start of the call, was looking to invest $7 million in movies over the next six weeks.
Sanghoee began by talking about his book. “Movies and books sell each other very effectively in today's marketplace,” Sanghoee started out, “which is where I think Merger becomes even more sensible a project. We know this book is going to sell the movie.”
“Fantastic,” responded the potential investor, Alex, who agreed to let a reporter listen in on the condition that his last name not be used. They chatted about how a deal might be structured and about Sanghoee's plans to get a major studio. How would he rope a big studio? “I can pick up the phone and get the meetings I want,” Sanghoee assured Alex.
Sanghoee found another “sucker”, as he jokingly put it, while on a date. One night while out drinking, Sanghoee and his companion bumped into Peter Delahunt, a municipal bond trader and an acquaintance of Sanghoee's date. Sanghoee, always the pitchman, talked up Merger and, a few weeks later, gave his new friend an autographed copy of the book. Soon Delahunt had committed to chip in six figures for development costs.
Despite the strong interest—Sanghoee also had a Canadian investor offering to put in the entire $15 million, with caveats—most investors were reluctant to complete a deal until they saw a cast list, even a tentative one. Sanghoee toyed with approaching Gyllenhaal, but Brillstein vetoed the idea.
With Khanna's help, Sanghoee hired two casting directors who had worked on movies such as The Good Shepherd and Coyote Ugly. They came up with a list everybody thought was realistic. For the role of the banker, they would go after actors like Ryan Phillippe and Matthew Fox, according to a business plan that Brillstein helped develop. Winona Ryder and Claire Danes were possibilities to play the reporter. For the central role of the villain, they would go after Amitabh Bachchan, a Bollywood star who could help Merger cross into international markets.
Hedge funds and private equity investors apparently liked what they saw. Two professional basketball players (whom Sanghoee declined to identify), a fund behind the 2006 film The Namesake and the Connecticut fund started serious talks, according to Sanghoee. Southern Sky, the fund based in Atlanta, agreed to put in $7.5 million.
In April, Southern Sky began to get nervous, Sanghoee said. Panic set in on Wall Street over the collapse of Bear Stearns and the economy, already running on fumes, was rocked by escalating oil prices and plummeting consumer confidence.
Southern Sky did not pull its money but started pushing Sanghoee to come up with a less risky plan, like bringing on an experienced director instead of Sanghoee himself. To try to appease the financier, he suggested a smaller investment of $4.5 million. “I know other people would have given up a long time ago,” he said in an interview last week, “but I'm now experienced enough to know that these setbacks are all just temporary.”
When Sanghoee began his pitch in October, he promoted his lucky timing. That month he told a potential investor in a telephone call that 20th Century Fox was working on a sequel to Wall Street, the 1987 film starring Michael Douglas. "We are going to be able to ride the publicity wave that movie will generate to get our movie noticed," he said during the call.
His new angle? His biggest competitor is out of the way.
“We think Wall Street 2 is not going to happen,” he said in a mid-April interview. “That is a golden opportunity for our picture.”
©2008/The New York Times