Catcha’s iflix expects to raise well over U$100mil

• Catcha a long-term player in a US$30bil market in SEA, says iflix CEO
• Acquisitions not part of growth strategy, market has no clear leader

THE rapid-fire announcements coming from the Catcha Group over the past few weeks has lent fuel to the suspicions of some cynics that chairman Patrick Grove’s latest disruption play in South-East Asia, via his version of Netflix called iflix, is being primed for a quick listing on the Australian Securities Exchange (ASX).
 
Confronted with that possible scenario, iflix group chief executive officer Mark Britt (pic above) had this response: “Be it in private hands or a listing, Catcha has been a long-term investor in all its businesses.
 
“Neither has it really been a seller of any its investments, post-listing,” he tells Digital News Asia (DNA).
 
With iflix, Catcha is very focused on the long-term opportunity that is very significant, he argues. “The listed value of paid TV and free-to-air companies in South-East Asia is about US$30 billion (RM112.4 billion).”
 
Even more interesting is this trend that Britt highlights: “Every time you see the Internet arriving in a traditional market, you witness the migration of value from the traditional players to the new entrants.”
 
For examples, Britt does not have to go further than his native Australia. When Internet classifieds launched and the first wave of companies got listed on ASX, “The market cap (capitalisation) of traditional newspapers largely moved to the new disruptive entrants in the classifieds space.”
 
Companies like REA Group and SEEK all became multibillion-dollar companies by market cap, playing in the online classifieds space.
 
In stark contrast, publishing powerhouse Fairfax Media dropped from an A$10-billion company in 2006 to one with a current market cap of A$2.1 billion.
 
Britt is absolutely convinced the same disruption will now happen in the entertainment space, with the entry of video-on-demand (VOD) services from iflix and others.
 
But one page from the Catcha playbook that iflix will not be following is in acquisitions.
 
“The reality is that we are at an earlier stage than both iProperty and iCar, which were the end result of consolidation amongst strong local players. There is no one who has emerged as a market leader here,” he says.
 
iflix is already in Malaysia and the Philippines, with Thailand on the horizon, followed by Indonesia and Vietnam.
 
The company has made “very significant investments in acquiring content. This is a very capital-intensive game,” says Britt.
 
As a result, funding is an ongoing process, with Britt sharing that iflix will “at least be raising in excess of US$100 million.”
 
Before launch, iflix had already signed content agreements with Twentieth Century Fox Television Distribution, BBC Worldwide and Warner Bros. International Television Distribution.
 
Earlier this week, it issued a statement announcing a content distribution agreement with The Walt Disney Company Southeast Asia, which covers The Walt Disney Company’s content across the Marvel Studios, ABC Studios, Buena Vista International and Touchstone Pictures brands.
 
This would bring blockbuster hits such as the Thor (pic) and Iron Man movie series, as well as classics like The Sixth Sense and Pretty Woman, to the iflix fold.
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ABC Studios TV series includes Marvel’s Agents of S.H.I.E.L.D, Revenge, Devious Maids, Once Upon A Time and Scandal.
 
Now while Catcha’s Grove had to make at least 200 investor pitches to help get iflix funded, Britt sees iflix now as riding a wave of investor momentum.
 
“If you look at the history of capital raising in South-East Asia, up till middle of last year, Catcha had the top three capital-raising exercises in terms of valuation in emerging markets, with iProperty and iCar,” says Britt.
 
But what he finds exciting is that Catcha no longer sets the investment benchmark.
 
“Over last 12 months, emerging markets investment capital has reached a critical mass,” he says, citing GrabTaxi as among the startups that raised funding at very significant valuations.
 
What this signifies to Britt is that investors “now understand the prospects of emerging markets – they think the Internet has reached a tipping point and are happy to invest real capital around the growing middle-class appetite of South-East Asia.”
 
In other words, watch out for that next round Patrick Grove raises.
 
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