CTOS Digital attracts record number of cornerstone investors

Article was originally published by The Borneo Post

KUCHING: CTOS Digital Bhd (CTOS Digital), formerly known as CTOS Holdings Sdn Bhd, has garnered strong support from local and global institutional investors for its impending initial public offering (IPO) on Bursa Malaysia Securities Bhd, constituting the largest number of institutional investors participating in a Malaysian IPO.

A total of 23 cornerstone investors participated in the institutional offering of the IPO, including renowned names such as the Employees Provident Fund Board, Permodalan Nasional Bhd, Aberdeen Standard Investment, AIA, Eastspring Investments, FIL Investment Management and JP Morgan Asset Management.

CTOS Digital is the holding company of CTOS Data Systems Sdn Bhd and has an associate stake in Business Online Public Company Limited in Thailand – making the Group Asean’s leading credit reporting bureau.

At the launch of its prospectus yesterday, group chief executive officer (CEO) Dennis Martin said that CTOS Digital’s growth story, combined with an innovative, comprehensive product offering has proven to be a compelling one.

“The tremendous support from notable local and global institutional investors reflects their confidence in our strong track record and growth trajectory going forward,” Martin added.

“CTOS Digital’s product offerings have expanded beyond credit reporting instruments to include a breadth of digital solutions to support every stage of the customer lifecycle.

“All of this comes on the back of steady financial growth, making us the leading credit reporting agency in Malaysia.”

Malaysia’s credit reporting market size is slated to expand at a CAGR of 13.2 per cent, a much faster pace compared to the Asean, US and UK markets.

“To cater to the robust environment in Malaysia, we have steadily introduced new products each year, including CTOS eKYC, CTOS Consumer and SME Score, CTOS ID-Guard, the Malaysian banking industry’s first fraud bureau, and many more.

“This is in line with our plan to introduce more digital solutions to ultimately build a dynamic, stable and agile financial ecosystem in Malaysia.”

Maybank Kim Eng Group CEO Datin Ami Moris said that in line with Maybank’s mission of Humanising Financial Services, they are pleased to play a part in bringing to the Malaysian capital market a digital solution that empowers the community to achieve financial well-being.

“CTOS Digital Group is well positioned to benefit from robust key areas of growth within the credit reporting industry and maintains a clear leading market position within this space,” RHB Investment Bank (RHB IB) acting CEO Jaimie Sia said.

“RHB Investment Bank is honoured to be part of the Group’s promising journey ahead and wish the Management Team of CTOS Digital Group every success.”

CTOS Digital Group provides digital solutions across three core customer segments – the Key Account segment, which includes a significant number of leading financial institutions and corporates; the Commercial segment, which includes a growing number of small-and-medium-sized businesses; as well as over 1.3 million individual customers who realise the importance of understanding their financial standing to better access credit.

As a further testament to the group’s growth, CTOS Digital recorded RM42.3 million revenue in the first quarter ended March 31, 2021 (1Q21), 24.1 per cent higher than the RM34.1 million in the previous corresponding quarter (1Q20), while normalised profit after tax and minority interest (PATAMI) for the quarter grew 73 per cent to RM16.4million in 1Q21 from RM9.5 million previously.

The 1Q21 performance outpaced the growth from the financial years ended December 31, 2018 to 2020 (FY18 to FY20) where the group reported a 12.8 per cent CAGR in revenue, from RM110.5 million to RM140.5 million.

Normalised net profit attributable to shareholders (PATAMI) recorded quicker CAGR of 22.2 per cent, jumping from RM30.5 million to RM45.5 million from FY18 to FY20.

“We registered all-round growth across core customer segments, a clear indicator of our increasingly critical function as a digital solutions provider and partner to both businesses and individuals,” Martin said.

“We are buoyant about our future prospects as we retain our growth thrust.

“We also strongly believe in finding the right balance between reinvesting our profits for sustainable growth and generating shareholders’ returns.

“To this end, CTOS Digital is establishing a dividend policy of 60 per cent of PATAMI to reward our shareholders’ confidence in us.”

The IPO exercise entails the public issue of 200 million new shares and an offer-for-sale allocation of 900 million existing shares, which are priced at RM1.10 per share.

Out of the RM220 million IPO proceeds, RM155.2 million will be used for the repayment of all bank borrowings to free up debt headroom, while RM59 million will be earmarked for synergistic investment and acquisition of target companies. The remaining RM6.1 million will be utilised to defray listing fees and expenses.

On the distribution of the 200 million new shares, 44 million will be made available for application by the Malaysian public via balloting; 120 million will be made available for application by the group’s eligible directors, employees and persons who have contributed to the success of the group, while the remaining 36 million will be offered to Malaysian and foreign institutional investors.

Meanwhile, the 900 million offer-for-sale allocations will also be made available to Malaysian and foreign institutional investors via a private placement exercise.

Applications for CTOS Digital’s IPO open June 30, 2021 and close on July 6, 2021. CTOS Digital is expected to list on the Main Market of Bursa Malaysia on July 19, 2021.

Maybank Investment Bank (Maybank IB) and RHB IB are joint principal advisers of the IPO exercise, as well as joint bookrunners, joint managing underwriters and joint underwriters with AmInvestment Bank.

On top of that, Maybank IB and RHB IB are joint global coordinators and joint bookrunners with Credit Suisse Securities (Malaysia) Sdn Bhd and Credit Suisse (Singapore) Limited.