MyEG in Philippines JV to implement e-government services

Some funds are believed to be just taking a risk-off mode to MyEG as the Government may review the company’s online monopoly.

PETALING JAYA: My EG Services Bhd (MyEG) has inked a joint-venture (JV) agreement with I-Pay Commerce Ventures Inc (IPCVI) to set up a JV corporation (JVC) for the purpose of engaging in the business of development and implementation of electronic government services projects in the Philippines.

This includes the provision of other services such as electronic payment in the Philippines.

The investment for this will be fully funded via internal funds and is not subject to shareholders’ approval or any other relevant authorities.

It is also not conditional upon any other corporate exercise being undertaken by MyEG.

“The JVC will enable MyEG to expand its geographical presence in Asean and open new frontiers where it can offer its expertise to operate government services and government-related services via the Internet,” MyEG told Bursa Malaysia.

This is part of MyEG’s organic expansion plans to venture into new markets.

Under the salient terms, MyEG and IPCVI will each subscribe and pay up the initial capitalisation of the JVC, with MyEG holding 40% equity interest and IPCVI the remaining 60%.

“MyEG will invest up to US$2mil in three tranches, subject to certain milestones being achieved by the JVC,” said MyEG.

Subsequent to the completion of the capitalisation, IPCVI shareholders will make capital contributions amounting to US$400,000 to the JV company, while MyEG shareholders will put in US$2mil.

The JVC will be incorporated in Manila, the Philippines, for a period of 50 years from the date of inception. This is, however, subject to extension by the mutual consent of shareholders.

There is also a period of exclusivity, where the provision of electronic Government services to the Philippines will only be via the JVC during the term of the agreement and five years after a shareholder ceases to be part of the JVC.

The parties also agree that the intended services by both IPCVI and MyEG will only be exclusively done by the parties through the JVC.

“At all times while MyEG remains a shareholder of record in the books of the JVC, MyEG shall grant the JVC the first right of refusal to deliver MyEG’s products and services which is required to be delivered through a Philippines incorporated entity, or which is to be delivered from the Philippines,” MyEG said.

The new investment is not expected to have any effects on MyEG’s issued and paid-up share capital or impact MyEG’s substantial shareholders’ shareholdings. It will not have any material effect on its net assets per share, earnings per share and gearing for the financial year ending June 30, 2017.

MyEG had previously brushed aside the notion that the bulk of its business activities were dependent on the government.

Its commercial solutions and services now make up 70% of the group’s business activities, therefore no longer rendering it just a concession for various e-government applications.

While MyEG’s primary business activities are the development and implementation of e-government services and the provision of solutions that are related to the e-government initiatives, such as vehicle road tax and drivers’ licence renewal and foreign workers’ permit renewal, among others, it made an effort to diversify into commercial solutions three years ago.

MyEG shares closed unchanged at RM1.82 yesterday. At this price, the company has a market capitalisation of RM6.6bil.