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ASX welcomes $180 million tech player on Tuesday

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An Australian company already with international operations will list on the ASX on Tuesday, with a market capitalisation of $177.4 million.

Access Innovation Holdings Limited (ASX: AIM) is scheduled to float on 15 September with an issue price of $1.23 per share.

The Motley Fool has confirmed with the initial public offer (IPO) information line that the listing will happen Tuesday as planned.

AIM is best known as AI-Media, a company that develops technology to provide captioning and transcription services.

AI-Media did not return The Motley Fool’s requests for comment.

However, its prospectus and publicly available information gives some clues about its situation as it goes public.

What does AI-Media do and who started it?

AI-Media was founded in 2003 by Alex Jones and Tony Abrahams in Sydney. Jones was born deaf and recognised the gap in the market for accessibility technology.

Abrahams is still hands-on, running the joint as chief executive officer. Before the float he owned almost a quarter of AI-Media, but will now cash in more than $340,000 from selling down to 19.2%.

The main game for the company is its cloud-based software that combines artificial intelligence, machine learning and human intervention that provides “captioning, transcription and translations”.

More than $50 million has been poured into the technology platform since 2009.

AI-Media runs business lines that respectively deal with content from “live broadcast”, “live enterprise” and “recorded” sources.

“Using a combination of machine and human curation provides levels of accuracy that are greater than machines alone,” the prospectus reads.

“This level of accuracy is a requirement to service AI-Media’s enterprise customers.”

AI-Media reported a pro-forma forecast of $37.9 million in revenue for the 2020 financial year, while it predicted $43.8 million for 2021. 

It will run a $8.6 million net loss after tax for 2020, and forecasts losing $5.8 million for the 2021 financial year.

Demand for captioning on the rise

The demand for captioning is on the rise with a significant rise in streaming video in recent years, according to AI-Media. Internationally, hard-of-hearing people make up 6% of the population, but this is predicted to double between by 2050.

“The media and entertainment industry also has to contend with regulatory requirements that mandate equality of access to content for hard-of-hearing individuals,” states the company.

“Legislation and regulations in many markets require that an increasing percentage of content requires captions, including that delivered through new channels (such as VOD), as well as the more established terrestrial and pay-TV sectors.”

The company is also seeing demand from the corporate and education sectors.

Acquisition and private capital raising this year

In May, AI-Media acquired US captioning and interpretation company Alternative Communications Services (ACS).

While the purchase price was not disclosed, AI-Media’s financial year 2020 revenue increased by 59% after the transaction.

AI-Media this year also raised about $10 million from external investors, including private investors CVC Emerging Companies Fund in the UK and Anzu Partners in the US.

Foxtel’s role in AI-Media’s early success

One of AI-Media’s first clients was subscription television provider Foxtel.

“In 2003, the costs of captioning were too high for the emerging Pay TV industry. The new Pay TV providers were faced with many more channels and smaller audience shares, but were confronted with the same costs to produce an hour of captioning.”

Jones and Abrahams proposed cutting captioning costs by editing existing international transcripts. That solution allowed Foxtel to provide more captions across as many channels as possible.

The co-founders also showcased their technology in 2010 on the ABC television show New Inventors, winning their episode.

AI-Media now has offices in Australia, USA, UK, Canada, Singapore and Norway. It employs about 160 full-time staff plus a pool of 2,000 contractors, casuals and freelancers.

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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