Authorised Investment Fund boosts stake in Asian Integrated Media, advances programmatic advertising JV

Authorised Investment Fund (ASX: AIY) will hold 30% of Asian Integrated Media (AIM), while at the same time officially applying to the PDF Board to take up a 30% stake in joint venture AAA Programmatic Pty Ltd, with the increased equity in both entities designed to boost Authorised Investment Fund’s footprint in the multi-billion dollar global programmatic advertising sector.

To cement its 30% ownership of AIM, Authorised Investment Fund will exercise an existing option agreement it has with the company and issue 15 million shares at $0.10 each – valued at $1.5 million. This will boost Authorised Investment Fund’s interest in AIM from 25% to 30%.

Digital advertising company AIM is now targeting the Chinese market where the upper middle class is expected to grow from $11.2 million in 2012 to $432 million by 2022.

China’s affluent class is anticipated to swell from $2.4 million to $72 million during the same period.

According to AIM, these classes want to consume top brands, desire the best holidays, and pursue an elite education.

As a result, the upper Chinese classes are looking for international brands, products and services – with the country representing 32% of global luxury consumption.

Chinese spending on luxury goods is predicted to reach US$147 billion by 2025, while outbound travel trips are anticipated to hit almost 130 million annually by 2022.

Meanwhile, Chinese consumption is on the rise in other sectors including beauty and automotive.

According to AIM, China’s digital economy was worth US$4.5 trillion in 2018 and the company is targeting these luxury goods and private wealth markets through digital advertising – otherwise known as programmatic advertising.

It is anticipated digital ad spending in China will exceed $65 billion in 2019 – accounting for 65% of total media advertising with this share to expand to 75.6% of total digital advertising spend.

AIM has already established China Elite and Travel Elite to offer programmatic advertising and access these consumer markets.

AAA Programmatic joint venture

To help reach these markets further, AIM, Ambient Digital Group, and Authorised Investment Fund, have established the AAA Programmatic joint venture, which is currently awaiting approval form the pooled development fund (PDF) board.

AAA Programmatic will provide global highly specific, data-driven programmatic online advertising campaigns focusing travel, luxury goods and private wealth sectors throughout China.

The joint venture will draw on Ambient’s extensive experience in running focused online campaigns using its proprietary technology and existing third-party relationships.

Ambient is experienced in collecting, analysing and disseminating specific and relevant data which is key in building the correct target audience.

The company has invested more than US$2 million in developing its programmatic technology as well as its in-house, data-driven programmatic trading desk.

Ambient is a stakeholder of Travel Elite and has created its own method of tracking demographic, class of travel, departure and destination data of airline and hotel site visitors – enabling “incredibly focused” advertising.

Meanwhile, AIM brings to the venture its experience in the sectors which will be pursued. The company also has a valuable client list and strong account management infrastructure.

For the 2019-2020 financial year, the joint venture is predicted to bring in pre-tax revenue of US$4 million, with this to increase annually to an anticipated US$7.1 million by 2021-2022.

Investment details

In order to establish its 30% interest in the AAA Programmatic joint venture, Authorised Investment fund will secure its stake in return for issuing the company 5.2 million fully paid shares at $0.30 each.

Authorised Investment Fund will also grant a further 5.2 million options to AAA Programmatic, which have an expiry date of 1 March 2021 and a $0.40 exercise price.

Once the deal has been completed, Authorised Investment Fund will own 30% of AAA Programmatic, with joint venture partners Ambient retaining 55% of the entity and AIM holding the remaining 15%.