SOME changes are taking place in low-profile Malaysian Genomics Resource Centre Bhd (MGRC).
The company, which offers genetic screening services, has seen the exit of some major shareholders in recent weeks. These include Malaysia’s sovereign wealth fund, Khazanah Nasional Bhd, and business tycoon Tan Sri Koh Kin Lip.
A little-known private equity firm, Crest Advisory Bhd, has become MGRC’s new single largest shareholder, following the exit of Khazanah’s indirectly-owned Synamatix Sdn Bhd in May.
Crest Advisory emerged in MGRC as a substantial shareholder in March 2020 with a 28% stake.
Recall that on March 5, Synamatix sold part of its stake amounting to 29 million shares or 28% of MGRC to Crest Advisory via an off-market deal.
The block was disposed of at 24.5 sen a share, which was at an 11.4% premium over MGRC’s closing price on March 5.
Meanwhile, an individual named Liw Chai Yuk also emerged on April 27 as the second-largest shareholder, and currently owns an equity interest of 7.8%.
It is also worth noting that MGRC’s present management’s control on the company has also reduced substantially.
MGRC’s founders, Robert George Hercus@Abdul Karim Hercus and Datuk Munirah Abdul Hamid, have ceased to be substantial shareholders in the company, following the exit of Synamatix.
Hercus, who is the managing director, currently owns MGRC by 0.08% directly and 0.37% indirectly.
Meanwhile, its executive director, Munirah, owns only a direct stake of 2.8% and an indirect stake of 0.4%.
This hints at the likelihood of MGRC getting a new management team to steer the company forward.
Interestingly, former Bank Negara governor Tan Sri Ahmad Mohd Don had been roped in as an independent and non-executive member into MGRC’s board of directors earlier this month.
This follows the resignation of a board member, Toh Seng Thong, in February 2020.
At this point, it is not yet known what plans the new single largest shareholder, Crest Advisory, has in place for the BioNexus-status MGRC.
The question is whether MGRC will undertake a new business focus, which is different from the pathology services, genome sequencing and analysis as well as genetic screening businesses that it has been involved in for over a decade.
There is not much information available online on Crest Advisory, which was only established in 2019. Its website states that the firm intends to “develop a diversified portfolio of investment in late stage start-up companies”.
It also mentions that Crest Advisory has introduced a five-year redeemable preference shares (RPS) programme that “offers both wealth preservation and potential high capital appreciation with cash solutions to investors”.
A background check on the privately-held Crest Advisory shows the involvement of private equity firm The Rain Maker Mgmt Sdn Bhd, which in turn is fully controlled by Singapore-based The Rain Maker Mgmt Pte Ltd.
The Rain Maker Mgmt Sdn Bhd owns 30% of Crest Advisory’s outstanding shares, while individuals Ajiah Arijan and Muhammad Hafiz Jamil own 35% each. Crest Advisory also has preference shares, likely referring to the five-year RPS programme.
Based on The Rain Maker Mgmt’s website, the firm says “our forte is identifying opportunities in the small and medium enterprise space and preparing them to become the next big thing, similar to how AliBaba and Netflix were nurtured”.
The Rain Maker Mgmt Pte Ltd is supported by its two key partners, namely, Hong Kong-licensed Asia Cornerstone Asset Management Ltd and My Premier Trustee (Malaysia) Bhd.
My Premier Trustee’s chairman and director Tengku Ariez Hazaril Tengku Abdul Halim is a member of the Kelantan royalty.
A quick check online shows that The Rain Maker Mgmt Sdn Bhd’s name appeared on the shareholding list of MyFiziq Ltd, an Australian-listed company that offers white label apps to businesses in industries such as health and fitness, insurance and medical.
Meanwhile, its parent, The Rain Maker Mgmt Pte Ltd, is a substantial shareholder in another Australian-listed company - Osteopore Ltd. The company makes 3D printed bioresorbable implants to assist bone healing.
As at Dec 31,2019, the company had total cash and cash equivalents of RM36.26mil, against loans and borrowings of RM2.6mil.
It is worth noting that MGRC has allocated RM4mil out of the RM42mil it received from the disposal of its core clinical pathology services business, MPath Sdn Bhd, last November for business expansion purposes to be utilised in two years.
For perspective, MPath is the parent of Clinipath (M) Sdn Bhd, a clinical pathology laboratory with 19 branches nationwide.
The bulk of the proceeds or RM22.77mil was allocated for distribution to shareholders via a special dividend.
With MGRC no longer involved in pathology services, which used to contribute 99% of its revenue, there are chances for the company to seek a different business segment, moving forward.
Another option is that it could expand its existing genetic screening services as well as genome sequencing and analysis businesses.
The genome screening services business, under the brand Dtect, screens a patient’s deoxyribonucleic acid (DNA) for genetic markers and is associated with various diseases or health conditions.
MGRC has been loss-making in the financial years of 2018 and 2019 (FY18-FY19).
However, in the first-half of FY20 ended Dec 31,2019, the company returned to the black with a net profit of RM24.2mil, as compared to a net loss of RM1.54mil a year earlier. But that profit was largely from its asset sale.
“A profit was achieved mainly due to a gain from the disposal of MPath Group and dividend from MPath Group, ” MGRC said in an earlier Bursa Malaysia filing.
Meanwhile, its revenue staged a strong surge to RM5.14mil, up from RM253,000 in the first-half of FY19.
Since its listing on the ACE Market in October 2010, MGRC has fallen off investors’ radar.
It has consistently traded below its initial public offering price of RM1.08. On May 22, the counter closed at 36 sen apiece.
However, the share price has doubled since mid-March, in line with the improved trading sentiment on Bursa Malaysia and the increased interest in healthcare-related stocks
MGRC has a market capitalisation of RM39mil.
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