£100m investment funds planned as City is bitten by the Hollywood bug

City financiers have begun a European film-funding drive in an attempt to imitate Hollywood's global blockbuster machine.

Early next month Stewart Till, the current chairman of the UK Film Council and former head of United International Pictures and PolyGram Filmed Entertainment, will hold talks with bankers from Dresdner Kleinwort. They will discuss the formation of a £100m investment fund, which he would lead, to back the distribution and marketing of UK and European films.

Ingenious Media, a UK media investment and advisory group, will begin marketing its own £100m fund next month. That effort is being led by the commercial director, Duncan Reid. "We've already got deals lined up to the tune of about £30m," said Mr Reid, a former business development manager at Lord Lloyd Webber's Really Useful Group.

A Dresdner spokeswoman declined to comment on the meeting with Mr Till. The bank's main focus is on drumming up European investor interest in US film-financing deals, she said. The bank held a first-of-its-kind event in London last week which was attended by almost 100 City hedge fund and private equity managers whom it hopes to involve in future deals.

Dresdner is at the forefront of a growing trend in America towards so-called slate financing deals, in which hedge funds and private equity firms invest in a portfolio of, for instance, 20 films in exchange for a share of the profits they produce.

"There were $5bn [£2.6bn] done in deals last year. This year will eclipse that," said Laura Fazio, the head banker of Dresdner Kleinwort's media and entertainment group, which has brokered several such financings in America, including a $750m deal for Dreamworks and a $597m financing package for 20th Century Fox.

For studios, the deals give increased liquidity and reduce their risk if a film fails to live up to expectations. The forthcoming moviesOcean's Thirteen and Fantastic Four: Rise of the Silver Surfer have such backing.

Ms Fazio cautioned that Europe is several years behind the market in America. The studios are smaller, the market is divided by cultures, languages and borders, and state broadcasters exert much more influence on the industry. "There just isn't the same scale here so that makes it more difficult, but there are opportunities," she said.

The Ingenious fund will buy into the distribution and marketing of UK and European-made films, but not their production. Mr Reid expects the fund to invest in 10 or 15 film portfolios.

One source said: "What you have [in Europe] is local producers making culturally and artistically significant films for local consumption. They are not designed with the goal of making money. Most producers and studios don't know how to make globally appealing movies.

"This is not about transplanting the US model. There should be a balance between these culturally significant movies and those that can be globally appealing. We need to be able to match those ideas with the appropriate financing."

THE BACKERS: Cocktails at the Dorchester and a sales pitch with star quality

Almost 100 hedge fund managers and private equity investors filed into the Dorchester Hotel last Wednesday evening. The executives, who between them hold the purse strings for tens of billions of pounds, were there for the cocktails. And, of course, a business pitch.

The investment bank Dresdner Kleinwort invited its guests in order to sell them what, for Europe at least, was a novel idea: bankrolling Hollywood blockbusters. It is a practice that is rapidly gaining ground with their rivals in America but has yet to take hold here. In the US last year hedge funds invested $5bn into "slate financings" with Hollywood producers and studios.

Investors put up anything from $200m to $1bn for an ownership stake in a portfolio of completed films. The studios get more cash to play with and a bit of cover, should a project bomb. The hedge funds get a share of the turnover generated from ticket and DVD sales, or even merchandising, depending on the deal.

This is not without its pitfalls. Poseidon, backed by the hedge fund Virtual Studios, was a disaster movie in more ways than one. But with bankers expecting this to be a record year for such deals, that hasn't dampened enthusiasm. It seems the draw of Hollywood truly knows no bounds.