Capital markets executive summary | Tue 15 Aug 2023

Capital markets executive summary | Tue 15 Aug 2023

MOHA cancelled Iris’ NIIse contract

Wholly-owned Iris Information Technology Systems Sdn Bhd (IITS) was the appointed developer of the National Integrated Immigration System (NIISe). The notice of termination from the Ministry of Home Affairs (MOHA) is dated 10 Aug. The RM1.16b NIISe contract was awarded to IITS in Jan 2021 for a period of 54 months from 1 Mar 2021 to 31 Aug 2025. On 24 May, MOHA gave a 12-month extension from 1 Sep 2025 to 31 Aug 2026 after the company demonstrated little progress. The Home Minister said that IITS could be replaced as the contractor if it is unable to implement the project. Iris is selling 80% of IITS for RM70m cash after signing a share sale agreement with information technology company Tass Tech Technologies Sdn Bhd (TTTSB) in Feb. TTTSB is wholly-owned by Tass Tech (M) Sdn Bhd, which is 70% owned by Shukor Ahmed and 30% by Raja Muhammad Badiuzzaman Raja Chulan. TTTSB paid the RM7m deposit but was allowed to defer payment of the RM41.13m 2nd tranche originally due in May and the RM21.87m 3rd tranche originally due in Aug. The 2nd tranche is now due in 29 Feb 2024 while the 3rd tranche is postponed to 31 May 2024. Iris closed at 8.5 sen.

GFM proposes transfer from ACE Market to Main Market

The aggregate profit after tax of the integrated facilities management service provider in the last 3 financial years was RM36.9m and profit after tax and minority interest was RM18.3m in FYE 31 Dec 2022. These satisfy the profit requirements for the proposed transfer of aggregate profit after tax of at least RM20m for the past 3 financial years and profit after tax of at least RM6m for the most recent financial year. The transfer will make GFM more visible reflecting its scale of operations, allow it to gain recognition from institutional investors, and open up access to the broader capital market to support its expansion. The exercise is expected to be completed by end 2023. As at 31 Dec 2022, GFM had RM101.2m cash and RM162.9m net assets. Its net cash flow from operating activities was RM25.8m. The transfer is subject to the approvals of the Securities Commission and Bursa. The counter closed at 19 sen.
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Sunway buys out its JV partner in Sunway City Iskandar Puteri

Sunway City Sdn Bhd is buying Iskandar Assets Sdn Bhd’s (IASB) 40% in their joint venture (JV) company, Sunway Iskandar Development Sdn Bhd (SIDSB), for RM770,450. It will also subscribe for 84.23m non-cumulative redeemable preference shares in SIDSB for RM84.23m, the proceeds of which will be used to redeem 76.27m non-convertible non-cumulative redeemable preference shares held by IASB. SIDSB was set up for a mixed development project, Sunway City Iskandar Puteri, on land worth RM412.73m. IASB is wholly-owned by Iskandar Investment Bhd, which is 60% owned by Khazanah Nasional Bhd. The acquisition and redemption, to be satisfied with internally generated funds, will be completed by 3Q2023. The counter closed at RM1.83.

Sime Darby buys South Australian Caterpillar dealership

Sime Darby Industrial Machinery Australasia Pty Ltd signed a share sale agreement to takeover Kuxton Pty Ltd and acquire 98.9% of Kagera Pty Ltd. Kagera is the holding company of a group of companies that operate Cavpower, a Caterpillar Inc dealership headquartered in Adelaide, South Australia. The purchase price of AUD500m (RM1.5b) is on a cash-free and debt-free basis subject to customary adjustments for working capital, capital expenditure and stocktake. Cavpower employs more than 450 people through a network of 9 branches across South Australia selling Cat equipment, parts, service and technology solutions primarily catering to the mining, construction, and energy and transportation industries. Sime Darby will fund the acquisition through borrowings and internal funds. The acquisition will enable the company to enter the South Australian dealership market through an established provider with future growth potential. It diversifies away from the coal markets to copper, lithium and cobalt. Cavpower earned profit after tax and minority interests of AUD23.1m (RM69.1m) in FYE 30 Jun 2022 and revenue of AUD364.5m (RM1.1b). Its net assets were AUD244.1m (RM729.7m). Sime Darby closed at RM2.16.

Mastercard signs MOU to buy stake in African fintech unit

The 2nd-largest global payment processing company will take a minority stake in the financial technology (fintech) business of Africa’s biggest wireless carrier, MTN Group Ltd, valuing it at USD5.2b (RM24.01b). The deal includes a commercial agreement to use Mastercard’s technology infrastructure for payments and remittance. Africa’s young, tech-savvy population is a fast-growing space in the fintech sector for wireless carriers. Investments have been in mobile-payment systems. Rivals Airtel Africa, Safaricom and Vodacom are transforming from basic voice and text mobile use to digitalisation. Airtel already has Mastercard as an investor in its mobile-money unit. Jio Platforms attracted capital from Facebook and Silver Lake Partners in 2020.