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Look deeper into Orange Eyes

Here at Oxford Capital, we are offering the exciting and exclusive opportunity for CIC Investors to invest up to nearly £1m into Orange Eyes: the production company behind the animated adaptations of the Gruffalo, Room on the Broom and Revolting Rhymes amongst others. They are well-regarded within the media industry and have a reputation for high quality productions within the children’s entertainment space; they have been nominated for four Oscars and have won two BAFTAs (with seven further nominations) as well as two Emmys and a Royal Television Society award.

From analysing the company, we have found some interesting trends underpinning their growth and continued expansion:

  • The Gruffalo is a modern classic of children’s literature, having sold 17 million copies worldwide. Julia Donaldson and Axel Scheffler – the creators of the Gruffalo – are still the second most borrowed authors in the UK (the Publishers’ Association), with regular new books by Donaldson and Scheffler helping keep the Gruffalo on the shelves and children watching the Gruffalo films.
  • The company has the rights not only for the audio-visual production of the Gruffalo but also for merchandising. There is a real potential for the brand to grow further: with the examples of Peppa Pig and Hello Kitty both selling more than $1bn of worldwide annual retail sales in merchandise. The UK Merchandising market alone is estimated at £10bn (Licensing Industry Merchandisers’ Association), with a 7% growth in pre-school entertainment licensed sales between 2015 and 2016 (the Licensing Letter).
  • The shift to non-linear (video on demand) consumption of video has led to increasing consumer demand for children’s TV shows – more than half of Netflix subscribers watch kids and family programming on a monthly basis. Alongside expected increases in future UK broadcaster spend on children’s TV, streaming platforms such as Netflix and Amazon are looking to spend more on original content as well as monetising existing successful shows.

The management team have a track record of producing profitable children’s animations, with a development slate of other children’s bestsellers lined up that should enable the company to scale and exploit these opportunities.

If you want to read more about this opportunity, visit our CIC page.

Estimated reading time: 2 min

 

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

  1. You could lose all the money you invest
    1. If the business you invest in fails, you are likely to lose 100% of the money you invested. Most start-up businesses fail.
  2. You are unlikely to be protected if something goes wrong
    1. Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker here.
    2. Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection here.
  3. You won’t get your money back quickly
    1. Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.
    2. The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
    3. If you are investing in a start-up business, you should not expect to get your money back through dividends. Start-up businesses rarely pay these.
  4. Don’t put all your eggs in one basket
    1. Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
    2. A good rule of thumb is not to invest more than 10% of your money in high-risk investments. https://www.fca.org.uk/investsmart/5-questions-ask-you-invest
  5. The value of your investment can be reduced
    1. The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
    2. These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

 

If you are interested in learning more about how to protect yourself, visit the FCA’s website here.