Authorised Investment Fund grabs pole position in race for Chinese market traction
Authorised Investment Fund owns a 25% stake in Asian Integrated Media, with an option of increasing its holdings up to 30%.
Digital media continues to generate significant buzz for Authorised Investment Fund (ASX: AIY), a digital-media-focused “pooled development fund” that invests in a range of companies working within sports, digital media and even renewable energy.
One of AIY’s major investments, Asian Integrated Media (AIM), has entered into an agreement with the world’s leading Formula One sponsorship and content rights management group, Grand Prix Management Group (GPMG Media).
The pair has signed a potentially lucrative memorandum of understanding (MoU) that will see the two companies working together for the next 3 years in China, Hong Kong and Asia – currently the world’s fastest-growing digital media location globally, operating across several different sectors and business niches.
Their prime focus will be Formula 1 racing – one of the world’s favourite sports and events that regularly attracts huge audiences both online and offline. GPMG has been working within F1 since 1995 and says it has established more than $1 billion of commercial agreements within the sport.
“Brand sponsorship doesn’t get much bigger than F1. We’re thrilled with our agreement with GPMG as this creates a huge opportunity for AIM to get a slice of this lucrative sponsorship revenue from the world’s most exciting and most watched motorsport,” said Peter Jeffery, CEO and founder of Asian Integrated Media.
The fact that Authorised Investment Fund is classified as a pooled development fund (PDF) means it can obtain several significant advantages including a 15% corporate tax on income (as opposed to the standard rate of 30%) and zero capital gains tax payable by investors.
Grabbing market traction
GPMG’s appointment of AIM carries the potential to create significant income for AIM in an event that has generated more than US$1 billion since inception.
For AIY, this makes for significant news given its 25% stake in the entity with an option of increasing its stake up to 30%.
According to the terms of the deal, AIM will represent GPMG in discussions and meetings with existing sponsors and develop new sponsorship opportunities for brands in China and Asia.
Therefore, AIM’s agreement represents strong revenue growth opportunities for both itself (and by extension, AIY) providing sponsorship sales and management together with on-the-ground assistance principally in China to tap the lucrative China sports sponsorship and activation market.
Revving up for Formula 1
AIM’s roots began in Hong Kong in 2002 with the business quickly expanding to Singapore and China.
Formula 1 racing is rapidly attracting a growing audience in China with more than 200 million F1 fans in China alone, according to statistics provided by Nielsen SDNA Survey.
Worldwide, F1 attracts a TV audience northward of 500 million, spread across several countries during the racing calendar (including Melbourne, when F1 comes to town to take centre-stage every March).
In addition to the growth of F1, AIM is also looking at leveraging the latest phenomenon in motorsport: electric vehicles.
So-called ‘E1’ racing is like F1 only it uses electric cars rather than petrol-powered ones. The addition of E1 has come about rather neatly alongside the immense growth of electric vehicle capabilities and their popularity amongst petrolheads, especially those that have been quick to take to Tesla’s spearheading vision of substituting petrol cars with far more efficient electric alternatives.
One of the prime commercial avenues for AIM and AIY will be the ABB FIA Formula E Championship – the world’s first fully-electric international single-seater street racing series.
Consisting of ten teams and 20 drivers, Formula E delivers world-class racing to 10 cities over five continents, throughout the seven-month championship season. The racing event will hold high-profile racing events including metropolitan cities such as New York, Hong Kong, Paris and Rome, and is therefore expected to grow quickly alongside broader electric vehicle adoption worldwide.
According to AIM “Formula E is racing, reinvented.”
“With the addition of Formula E in the sponsorship agreement, this is not only good news for the planet but good news for the shareholders of both AIM and AIY. This fits right in with AIM’s strategy of pushing latest technologies to push revenues forward,” says Mr Jeffery.
With the agreement covering China and Asia and the plethora of global companies wanting to tap into these markets, the potential commerciality of AIM’s MoU could be significant for both AIM (and AIY as its significant shareholder).
AIM’s current partners include Cathay Pacific, Qantas, Handelsblatt, Die Zeit, Daily Mail UK and Richesse among several other major companies and brands.
“Our agreement with AIM covers the rapidly emerging region in F1 of Asia but both GPMG and AIM believe that most scope will come from China, particularly with the China automotive companies who are just starting to expand internationally. We’re thrilled to be partnering with one of the world’s leading ad sales networks in AIM,” said Richard Davies, managing director of Grand Prix Management Group.