KUALA LUMPUR (July 21): Hextar Global Bhd had today entered into a consortium agreement with Dagang NeXchange Bhd's (DNeX) major shareholder Arcadia Acres Sdn Bhd besides Fass Payment Solutions Sdn Bhd's special purpose vehicle Ihsan Equity Sdn Bhd to establish a Syariah-compliant digital bank.

According to a joint statement today by agrochemical producer Hextar Global, Arcadia Acres and Ihsan Equity, the consortium agreement is pursuant to the submission for a digital banking licence application to Bank Negara Malaysia (BNM) on June 30, 2021.

"This is the first time the three parties are collaborating, with each partner contributing its own unique expertise and platform to establish a Syariah-compliant digital bank (the bank). The consortium believes that the unconventional approach and experience as well as a focus on eco-systems will allow for a better understanding of the requirements and needs of each community that the bank would be serving, hence, creating equal opportunities in accessing financial services and empowering niche levels of communities that have been known to face challenges in accessing finance, financial education and financial freedom. 

"With its value proposition and focus on traditionally underserved communities, the consortium believes that the bank will be able to assist Malaysia in achieving its developmental goals. 

"The consortium is also expected to include developmental agencies entrusted by the Government of Malaysia to upgrade and improve the lower-and middle-income earners in the country,” said the statement, which was attached to Hextar Global’s Bursa Malaysia filing today.

Hextar Global executive director Datuk Eddie Ong Choo Meng said in the statement that Arcadia Acres has prepared a very comprehensive proposal which sets out clearly a blueprint to promote financial inclusion and literacy, especially among the underserved through digital banking services which are also Syariah-compliant.

Ong said Hextar Global sees Arcadia Acres and Ihsan Equity as ideal partners to lead this push into the digital banking space.

“Hextar Global is the flagship company of the Hextar group of companies and we wanted to ensure that our representation in this consortium will allow us to contribute in a meaningful way. Being one of the largest agrochemical producers in Malaysia with over 30 years’ experience and a portfolio of over 600 registered products, we are involved in the entire supply chain of the agrochemical business, from research and development to manufacturing and distribution. Our supply network includes distributors, agents and corporate plantation groups with our products being sold locally and exported to over 30 countries. 

“Hence, Hextar Global has the infrastructure to provide ready access to corporates and small holders as well as underserved communities within the agriculture sector in Malaysia and regionally. We have been keenly looking at the digital economy as an area for us to expand into and to complement our current businesses. 

"With a platform of eight listed entities within the larger Hextar group of companies which are involved in a wide range of industries such as agriculture (agrochemicals and fertilisers), healthcare (rubber gloves), telecommunications (fibre optic cables), renewable energy (solar), logistics and consumer products, we are able to provide access to layers of thriving ecosystems which could be tapped by the bank. Hence, our excitement at being part of this collaboration,” he said.

The joint statement said Arcadia Acres, which is a wholly-owned bumiputera investment holding company, is the single largest shareholder in DNeX, the businesses of which include semiconductor fabrication, IT besides oil and gas operations.

According to the statement, Arcadia Acres also owns a 30.3% stake in IT and telecommunication firm Theta Edge Bhd, in which Lembaga Tabung Haji holds a 38.4% stake.

DNeX's Bursa filing on June 16, 2021 showed that Arcadia Acres owned an indirect 15.01% stake in DNeX as at June 15, 2021.

According to the joint statement today, Ihsan Equity is a special-purpose vehicle set up by Fass Payment, Datuk Abu Huraira Abu Yazid, Mohamad Khir Amran and DAT Capital LLC, USA to operate as a non-bank financial institution.

Arcadia Acres managing director Zainal 'Abidin Abd Jalil said in the statement that Arcadia Acres via DNeX and Theta Edge has experience in undertaking digital technology-related government projects within a highly regulated environment.

Zainal 'Abidin said such experience provides Arcadia Acres with the expertise to understand the requirements of a digital bank to build an optimal infrastructure for such an entity.

Meanwhile, Ihsan Equity chairman Abu Huraira said in the statement that Fass Payment via  Ihsan Equity has experience in marketing, distribution and merchant on-boarding for mobile-payment systems, hence, the proposed digital bank will immediately have access to the requisite technology and expertise to commercialise its business.

He claimed that Fass Payment is an e-money licence holder approved by BNM.

At 3.42pm today, Hextar Global's share price fell two sen or 1.52% to RM1.30 with a market value of about RM1.7 billion.

Hextar Global has 1.31 billion issued shares.