Spanish state investment vehicle SETT and South African group Known Associates are partnering on a major audiovisual venture in Spain, encompassing a production company based in Madrid and post-production studios in the Canary Islands and the Basque Country.

SETT, the investment arm of Spain’s Ministry for Digital Transformation, will commit €12.7 million ($14.5 million) to two public-private companies valued at a combined total of €25 million ($28.5 million).

In the first deal, SETT will commit $10 million to Moonlighting Studios Spain, the local arm of South African production services heavyweight Moonlighting Films. The company will receive a total capital injection of $20.5 million to establish a production base in Madrid focused on project development and intellectual property creation.

The Madrid project is expected to produce 10 feature films and documentaries. Moonlighting has provided production services on major international titles, including “Mufasa: The Lion King,” “Mad Max: Fury Road,” “The Woman King,” “Mission: Impossible – The Final Reckoning,” and the Netflix series “Resident Evil.”

In a second transaction, SETT will invest $4.4 million to acquire a 49% stake in the Spanish division of South African post-production company The Refinery. The company will receive a capital injection of $9.1 million and will establish facilities in the Canary Islands and the Basque Country, the two parts of Spain with the strongest tax incentives for production.

The two sites will function as an integrated post-production platform aimed at retaining more audiovisual work, spend and creative control in Spain rather than outsourcing those services abroad.

“We are going to continue with this investment effort because it is very profitable for the country. The audiovisual industry is cultural, it is not just about the economic value and the employment it generates,” said the Minister of Digital Transformation, Óscar López.

Moonlighting and The Refinery are part of Known Associates Group, founded by Tshepiso Chikapa-Phiri, who serves as the group’s CEO. Private capital for both companies will come from South African investment holding company Sinobhukosi.

“This agreement with SETT marks a turning point for our company and for South Africa,” said Chikapa-Phiri, adding that Spain would provide a strategic platform to develop Spanish-language content with international reach and strengthen ties between the two countries.

As a peripheral part of the European Union, the Canary Islands also offer a Special Zone corporate income tax (ZEC) of 4% and 7% VAT, compared to 25% and 21% in mainland Spain. KAG has initiated the process for its installation in the ZEC Zone of the Canary Islands, providing support to the ZEC to understand and analyze the Canarian ecosystem, as explained by Pablo Hernández, executive president of the ZEC. Variety.

The operations are part of the second phase of Spain’s Audiovisual Hub Plan, supported by the EU. SETT has also supported the establishment of the Mexican company Ítaca Films in Madrid, the British company Good Films sets up shop in Alicante’s City of Light and the VFX giant DNEG acquires a significant shareholding position in Anima Kitchent on the Canary Island.

John Hopewell contributed to this article.