This article first appeared in The Edge Financial Daily on July 19, 2018

KUALA LUMPUR: Cashless payments provider Revenue Group Bhd made a strong debut on the ACE Market yesterday, opening at 55 sen — a premium of 18 sen or 46.85% to its offer price of 37 sen.

The group’s shares surged to close 25.5 sen or 68.92% higher at 62.5 sen and it remained the most actively traded stock on Bursa Malaysia throughout the day, with 18.83 million shares done by market close.

“I think [the performance] showed that investors are confident of the cashless payments market,” said Revenue Group managing director and group chief executive officer Eddie Ng Chew Siong.

Revenue Group’s listing followed another successful initial public offering (IPO) a day earlier, which saw water-heating firm Seers Bhd shares on the Leading Entrepreneur Accelerator Platform (LEAP) Market gain 25% to 10 sen on its first day of trading.

Speaking at a media briefing after the IPO, Chew Siong said the group is in the midst of discussions with foreign banks as potential partners, although no decision has been made yet.

Revenue Group already counts nine Malaysian banks and four foreign players as partners, the latter being Citibank, OCBC Bank, UOB Group and US-based financial services group First Data.

“With our existing track record of having nine [local] banks on board, we are pretty confident that things will work out,” Ng Kuan Horng, chief financial officer of Revenue Group, added. He said these banks already make up about 80% to 90% of the domestic banking industry.

Going forward, Chew Siong said transactions are expected to make up a growing share of the group’s revenue as gross profit margins from the sales of its electronic data capture (EDC) terminals narrow.

“I see hardware revenue coming down slightly but transaction revenue increasing,” he said, adding that revenue is currently evenly split between both segments.

However, he acknowledged that Revenue Group will have to continue selling more terminals to achieve its ultimate objective of increasing transaction volume. It currently has over 20,000 terminals in operation nationwide.

Chew Siong noted that Revenue Group considers GHL Systems Bhd, another publicly-listed payment solutions company as a co-competitor instead of a “real” competitor.

“We are in the same industry of course, but I consider us more as co-competitors. Our real competitor is still cash,” Chew Siong said.

Revenue Group plans to utilise RM1.5 million of proceeds earned from its listing for its regional expansion.

“We have started discussions about partnerships in terms of our software solutions in Myanmar and Cambodia,” Chew Siong said.

It will also use its proceeds as capital expenditure to purchase approximately 9,000 new digital EDC terminals and enhance its flagship revPAY platform, as well as expand its information technology team and repay bank borrowings.

Revenue Group’s IPO involved the issuance of 55.71 million new shares, representing 25% of the enlarged share capital.