MUMBAI: Mahindra & Mahindra is setting up a venture capital fund with an initial corpus of $50 million (Rs 2 billion). The fund, which will be held by a trust, is going to invest in the group's film and media initiatives.

"The name of the media company is not yet firmed up. But it is the VC fund which will invest into the media business," says a source in the company.

Though the company will kick off with the film production business, it also plans to get into the television, internet and mobile space. "We are also considering the broadcasting business," the source says.

The peak funding requirement for the movie business would be $75 million (Rs 3 billion), the source adds. The plan is to produce 2-4 films in the first year of operations.

The company intends to produce 10-12 movies a year. "Our main aim is to produce the movies ourselves. But we will also be looking at acquisitions," the source says.

The company, headed by Andrey Purushottam, will engage in Hindi movies but also expand into the regional languages. "The Indian filmed entertainment business is seeing fast growth. We want to aggressively participate in that," the source says.

The film industry is exploring new financial options to fund its fast growth. Financial services provider Religare Enterprises and film production house Vistaar Entertainment Ventures have announced the launch of India's first regulated film fund, Vistaar Religare Film Fund (VRFF), which aims to raise Rs 2 billion in the first round.

"For each movie, we will set up a special purpose vehicle. This SPV will hold the IPR of the film," says Vistaar Religare Capital Advisors chairman and managing director Sheetal Talwar.

Indian companies UTV and Network18 group have tapped the Alternative Investment Market (AIM) of the London
Stock Exchange to raise money. Eros, floated by Kishore Lulla who is based out of UK, is also listed on the AIM and is ramping up its film production and distribution business.