KUALA LUMPUR: Securemetric Bhd is investing RM6mil for a stake in an Indonesian digital identification and technology company.
Securemetric told Bursa Malaysia today, that it has entered into a conditional shares subscription agreement (SSA) to 3,639 class B preference shares in PT Privy Identitas Digital (PrivyID) for 20,250,000,000 rupiah (RM6mil).
“This deal would advance Securemetric’s strategic objective of becoming one of Southeast Asia’s leading digital security players," CEO Edward Law Seeh Key said in a statement today.
The deal also gives Securemetric a 5% stake in PrivyID.
The subscription price, Securemetric said in a filing with Bursa Malaysia today, was arrived based on PrivyID’s valuation through comparisons with the valuations of similar international companies.
PrivyID has yet to have a local direct competitor in Indonesia.
"By comparing similar businesses’ funding rounds and their valuations against PrivyID, PrivyID has estimated its valuation to be US$30mil (RM122mil)," Securemetric said.
With the investment in PrivyID, Securemetric hopes to create new synergies between the companies.
Its unit in Indonesia, PT Securemetric Technology already has an on-going support level agreement with PrivyID.
"Pursuant to the SSA, PrivyID will renew the support level agreement up to year 2023 in which the renewal is expected to contribute positively to Securemetric’s financial performance," it said.
PrivyID has established a portfolio of more than 215 Indonesian companies, including the nation’s largest banks and telco companies, prominent fintech startups, as well as several small-medium enterprises.
As at 14 January 2020, there are over 4.5 million individuals registered as PrivyID users.
"The investment may also enable Securemetric to receive dividend income and potentially capital gains arising from the investment,' it said.
According to Securemetric, PrivyID recorded a revenue of about RM2.5mil, net loss of RM4.6mil and shareholder's deficit of about RM3.35mil as Dec 31, 2018.
"The management of PrivyID believes that PrivyID has adequate resources to continue in operational existence for the foreseeable future," it said.
In the fourth quarter of 2019, PrivyID experienced significant revenue growth after it secured the certification as a public certification authority in Indonesia.
"Securemetric is of the view that there is promising potential for it to leverage on PrivyID’s strong brand name and over 200 enterprise customers to cross sell Centagate Cloud and other upcoming Security As A Service products," it said.
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