Local film and television group Known Associates is raising a R500m fund to invest and take equity in big-budget productions that come to South Africa’s shores.
South Africa’s creative industries, particularly in film and television, continue to be a big employer and draw foreign investment. With a globally regarded skills base and enviable locations, the country has played a role in a number of Hollywood productions, as well as having its own buoyant local scene.
Even then, Known Associates COO Mpumezo Vuzane says there is a bigger role for local players to invest in and fund projects that have the potential for high returns in the long run.
The group’s Moonlighting Films has facilitated international productions in South Africa such as Mission Impossible — The Final Reckoning and The Woman King.
Vuzane told Business Day that Known Associates is raising a new fund, targeting R500m, to take equity positions in films that would allow them to share in the profit rather than just earning interest on loans for such projects.
This is a shift from the typical commissioning model, where broadcasters and studios own all the intellectual property (IP), to one where producers retain some or all of the IP and can exploit rights globally.
Vuzane also serves as CEO of Known Associates Film & Television Investments, the group’s existing fund backed by investors like the Industrial Development Corporation (IDC).
“We have deployed about R300m [so far],” he said.
“We are now closing a new fund. We’ve proven that South Africa has the capability to create blockbuster films, high-quality movies that are commissioned by the studios. But we just manufacture, and then we export. We don’t get to participate in the IP. Now we’re setting up that second part of the fund to take an equity position in these films.”
We are now closing a new fund. We’ve proven that South Africa has the capability to create blockbuster films, high-quality movies that are commissioned by the studios.
— Mpumezo Vuzane, Known Associates COO
He said the move can become another way of motivating international productions to come into the country. “Right now they come in for our beautiful locations and for our experienced cast, crew and the infrastructure that we have.”
According to the South African Cultural Observatory, a national statistical and socioeconomic research project, creative industries contributed R161bn to South Africa’s economy in 2020. These industries now contribute just under 3% to the country’s GDP, the same as agriculture, with most coming from audio-visual products at R48.4bn.
Vuzane argues that film and television is an actual asset class, albeit misunderstood by traditional financiers in South Africa. He calls it a “sunrise industry” with significant exploitation potential, contrasting it with the tech start-up space, noting parallels in funding models at the early stage and in private equity.
The group’s portfolio includes Known Associates Entertainment, a scripted production company creating local film and TV content, as well as a distribution business, a post-production refinery and a product placement agency, Media Heads 360.
In addition, Vuzane emphasises taking a “commercial view” rather than a “creative view” when investing in film. He looks for market appetite and validates projects based on pre-sales and distribution agreements rather than just the script’s artistic merit.
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