After recently obtaining shareholders’ approval to undertake placement of up to 10 percent of total issued shares, Malaysia credit reporting agency CTOS Digital Berhad announced Wednesday that it had finalized the issue price of its proposed primary placement exercise at MYR1.58 ($0.38) per share to raise a total of MYR173.8 million ($41.4 million) in proceeds for the group.
CTOS Digital said in a statement the proceeds would partially fund the group’s MYR205.8 million ($49.02 million) acquisition of a 49 percent stake in fintech specialist Juris Technologies (JurisTech), with the balance funded by bank borrowings. The acquisition is slated for completion in the first quarter of 2022.
Under the proposed primary placement exercise, the group would issue a total of 110 million new shares representing 5 percent of the total number of issued CTOS Digital shares. Upon the listing of the new shares in early March 2022, CTOS Digital’s issued share capital would enlarge from 2.20 billion shares to 2.31 billion shares.
The issue price per share of MYR1.58 represents ($0.38) a 6.5 percent discount to five-day volume weighted average price (VWAP) up to and including February 21, 2022, being the market day immediately prior to the price fixing date.
Following the strong demand for this placement, private equity firm Creador, via Inodes Ltd, placed 185 million shares it owns in CTOS Digital at the same price of MYR1.58 ($0.38), its first placement since the Company’s initial public offering (IPO) in July last year. This pares Inodes’ shareholding in CTOS Digital from 40 percent to 30.1 percent post issuance of the primary placement.
“The board decided to only raise MYR173.8 million ($41.4 million) through the proposed placement with a view of optimizing the amount of equity and debt raised to fund the company’s acquisitions and to defray the estimated expenses related to the proposed placement. The proposed placement was oversubscribed,” said CTOS Digital.
More importantly, it said CTOS Digital is marking an eventful start to the new year, firstly by obtaining shareholders’ approval for its largest acquisition ever in JurisTech, and subsequently gaining investors’ confidence for this placement exercise.
“This support certainly spurs us forward in our growth plans as outlined in our strategic roadmap,” it said.
According to CTOS Digital, the management has internally targeted strong growth in its net profit by up to 30 percent circa MYR75 million ($17.87 million) to MYR80 million ($19.06) in the current financial year ending December 31, 2022 (FY2022), buoyed by new contributions from JurisTech as well as the stronger uplift in its existing businesses in line with the rebounding economy.
“We believe we are only at the cusp of a new growth phase and are optimistic of our prospects going forward,” it said.
Meanwhile, Creador said that it did not envision any further sale in the foreseeable future and remains excited about the long-term growth of the company.
“The firms sees tremendous growth opportunities in new product solutions for key accounts and higher penetration of small medium enterprise (SME) market. In addition, JurisTech bring new solutions which are relevant to CTOS Digital and there are significant synergies,” it said.
Based on a report issued by International Data Corporation in 2020, it said Southeast Asia’s credit reporting and data solutions industry is expected to grow at an annual compounded growth rate (CAGR) of 10.8 percent from 2021 to 2025.
“This represents a significant opportunity for CTOS Digital, which counts some of Southeast Asia’s largest credit reporting agencies in its portfolio. The post-pandemic recovery is also expected to drive growth, which in turn will drive the utilization of credit,” it said.
It also said that CTOS Digital has a clear and strategic growth roadmap to capitalize on the digital and credit information opportunities in ASEAN.
“With the strong macro tailwinds and some of the industry’s most experienced talents in its senior leadership team, we are confident the company will be able to maximize these opportunities and meet growth expectations in the coming years. We are therefore committed to remaining a long-term investor, which will allow us and the investors we represent to realize consistent and sustainable returns in a fast-growing category,” it said.
CTOS Digital is the holding company of CTOS Data Systems Sdn Bhd, a credit reporting agency in Malaysia. It also has 22.65 percent stake in Business Online Public Company Limited (BOL), the credit information and risk management provider in Thailand.
Founded in 1990, CTOS Digital offers a broad suite of innovative digital products and credit risk management solutions and services which gives it a solid platform to thrive not just in credit reporting, but also in digital credit decisioning across Southeast Asia.
With a broad suite of innovative products and services developed in Malaysia over the company’s 30-year history, the group’s digital solutions are widely used by the country’s banking and financial institutions, insurance and telecommunication companies, large corporations, SMEs, legal firms, statutory bodies as well as consumers for self-checks.
The group provides solutions across three core customer segments – the key account segment, which includes a significant number of leading financial institutions and corporates; the commercial segment, which includes a growing number of small-and-medium-sized businesses; as well as over 1.4 million individual customers registered with CTOS ID in its direct-to-consumer (D2C) segment.
CTOS Digital’s mission is to empower individuals and businesses with the confidence to make sound credit decisions through access to data and insights at greater
ease and speed, leading the community to better financial health. Its vision is also to make Malaysia a centre of excellence for credit reporting in ASEAN.
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