CTOS Digital Bhd announced that it had finalized the issue price of its proposed primary placement exercise at RM1.58 per share to raise a total of RM173.8 million in proceeds for the Group.
The proceeds of RM173.8 million would partially fund the Group’s RM205.8 million acquisition of a 49% stake in fintech specialist Juris Technologies (JurisTech), with the balance funded by bank borrowings. The acquisition is slated for completion in the first quarter of 2022.
Under the proposed primary placement exercise, the Group would issue a total of 110.0 million new shares representing 5.0% of the total number of issued CTOS Digital shares. Upon the listing of the new shares in early March 2022, CTOS Digital’s issued share capital would enlarge from 2.20 billion shares to 2.31 billion shares.
The issue price per share of RM1.58 represents a 6.5% discount to a 5-day volume-weighted average price (VWAP) up to and including 21 February 2022, being the market day immediately prior to the price-fixing date.
Following the strong demand for this placement, private equity firm Creador, via Inodes Ltd, placed 185 million shares it owns in CTOS Digital at the same price of RM1.58, its first placement since the Company’s initial public offering (IPO) in July last year. This pares Inodes’ shareholding in CTOS Digital from 40.0% to 30.1% post-issuance of the primary placement.
CTOS Digital stated, “The Board decided to only raise RM173.8 million through the Proposed Placement with a view of optimising the amount of equity and debt raised to fund the Company’s acquisitions and to defray the estimated expenses related to the proposed placement. The proposed placement was oversubscribed.
“More importantly, CTOS Digital is marking an eventful start to the new year, firstly by obtaining shareholders’ approval for our largest acquisition ever in JurisTech, and subsequently gaining investors’ confidence for this placement exercise. This support certainly spurs us forward in our growth plans as outlined in our strategic roadmap.
“The management of CTOS Digital has internally targeted strong growth in our net profit by up to 30% circa RM75-80 million in the current financial year ending 31 December 2022 (FY2022), buoyed by new contributions from JurisTech as well as the stronger uplift in our existing businesses in line with the rebounding economy. We believe we are only at the cusp of a new growth phase and are optimistic of our prospects going forward.”
Echoing the sentiment, Creador said, “We do not envision any further sale in the foreseeable future and remain excited about the long-term growth of the company. The firm sees tremendous growth opportunities in new product solutions for key accounts and higher penetration of the small-medium enterprise (SME) market. In addition, JurisTech brings new solutions which are relevant to CTOS Digital and there are significant synergies.
“Based on a report issued by International Data Corporation in 2020, Southeast Asia’s credit reporting and data solutions industry is expected to grow at an annual compounded growth rate (CAGR) of 10.8% from 2021 to 2025. This represents a significant opportunity for CTOS Digital, which counts some of Southeast Asia’s largest credit reporting agencies in its portfolio. The post-pandemic recovery is also expected to drive growth, which in turn will drive the utilisation of credit.