KUALA LUMPUR: AmInvestment Research has maintained its buy call on N2N Connect following its announcement of a proposed private placement with SBI Holdings Inc.
Yesterday, N2N proposed a placement of about 52 million new ordinary shares of 10% of its total issued shares excluding treasury shares to the Japan-based finance company.
"The issue price has been fixed at RM1.25/share, which represents a 13% premium to the 5-day VWAP – a testament to N2N’s deep value. The exercise is expected to raise net proceeds of about RM65mil, which would be utilised entirely for business expansions within 2 years," said AmInvestment.
The research house also said that while the placement dilutes earnings per share by 1% to 2%, exciting developments from a potential strategic alliance are likely to follow.
These have not been factored in pending further clarity on the financial impact, said AmInvestment.
SBI was first incorporated under the name of SoftBank Investment Corporation and was the finance arm technology giant Softbank Group until it was sold in 2016.
"The proposed exercise is motivated by the intention of forming strategic business alliances between N2N and SBI. The collaboration is aimed at expanding N2N’s regional footprint and expedite the set-up of an “Asia trading hub”.
"In addition, the collaboration allows N2N to tap into SBI’s large network of brokers and its headway in the financial technology (fintech) such as blockchain," said AmInvestment.