DIVERSIFIED group Insas Bhd has taken a firm step to break out of its brick-and-mortar business to enter the financial technology (fintech) segment.
It is forming a fintech firm that could possibly see a listing in the next eight months. Fintech is a segment of applied technology to enhance financial systems that include payment, money transfers, loans and fundraising.
The group, which has interest in financial services, property and retail, recently merged two of its technology units into a bigger entity.
Insas’ 21.26%-owned fintech company Numoni Pte Ltd, which is based in Singapore, will be buying its 51%-owned J&C Pacific Sdn Bhd.
J&C is a mobile telecommunication products and services provider that has a share base of 1.25 million. Insas will be selling its 51% or 637,500 shares to Numoni for RM6.12mil, in the form of 694,487 convertible preference shares issued by Numoni.
On top of Insas’ 51%, Numoni will also be buying the remaining stake from J&C’s minority shareholders, valuing J&C at RM12mil.
“By combining Numoni and J&C, Insas Technology Bhd will enhance its current investment objectives in the area of fintech by making the combined company a larger entity with good synergy, a more global footprint and better upside potential,” Insas said recently.
“Numoni has vide an option letter granted to the vendors a call option to require Numoni to sell to the vendors all of the sale shares in the proportions of their respective shareholdings in the event that Numoni did not achieve an exit event, including and not limited to a qualified initial public offering or trade sale by Feb 29, 2016, or such later date as the parties may agree in writing,” the company says.
It is learnt that Singapore’s Standards, Productivity and Innovation Board and venture capital firm OWW Capital Partners have invested in Numoni.
The buyer and sellers agreed on the price tag based on J&C’s net asset value of RM8.05mil and its audited financial statements for the year ended Dec 31, 2014.
Meanwhile, the convertible preference shares issued by Numoni are priced at S$3.30 each. One new share can be converted into one ordinary share.
From the sale, Insas’ stake in Numoni will increase to 26.56%.
The buyer then will be able to tap onto J&C’s Flexi Airtime Reload Terminals that are installed in Malaysia as part of its global market plan. Numoni’s terminal network is in Singapore, Indonesia, Hong Kong and the Philippines.
Numoni CEO Norma Sit tells StarBizWeek: “We see a lot of synergies from J&C. We’re on a rapid growth path and will continue to expand in the Asean region.”
She says about 400 million people living in Asean are underserved by banks because they live in remote areas and are in the low-income bracket.
The enlarged team will allow it to reach out to more underserved customers.
Its focus will be on remote and highly populated areas.
Numoni is involved in digital transaction, micro loans, micro payments and micro remittances. “Micro means anything below RM300,” she explains.
It is also a majority owner of Thrift Bank in the Philippines that works like a post office savings bank.
The fintech firm deploys terminals known as Nugen that enable payments for people without bank accounts.
This group of customers can also deposit money, make payments, lend and borrow from these terminals.
“Through our partnership with Insas, we roll out Nugen internationally. The machines are manufactured in Senai, Johor,” says Sit.
On the other hand, it has over 2,000 terminals that will be upgraded to process new reload products as part of the business integration with Numoni.
“We’ll work with J&C management to see where we can bring banking to,” Sit says.
The deal does not have material financial effects except for a disposal gain of RM1.6mil. The proposal is also subject to approvals.
Based on Insas’ latest annual report, investment holding and trading is its biggest income contributor, followed by financial services, credit and leasing and information technology-related services.
It had said that it was increasingly focused on its technology division for growth.
The company owns 29.4% in Inari Amerton Bhd, a provider of back-end semiconductor packaging services for the electronics and semiconductor industry comprising back-end wafer processing, package assembly, radio-frequency final testing, and optoelectronics and fiber-optics packaging services.
Inari Amertron, which has a market cap of RM2.4bil, was listed in July 2011 on the ACE Market and would later transfer to the Main Market. Insas’ stake in Inari Amertron is worth about RM700mil.
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