KUALA LUMPUR (Dec 31): Non-bank financial institution Aeon Credit Service (M) Bhd has formalised its venture to the Philippines via a share subscription in Aeon Credit Service Philippines Inc (ACSP) for 164.5 million pesos or RM12.8 million, cash.
 
Aeon Credit said it will acquire 10,000 common shares and 154,500 convertible preferred shares in ACSP, which will give it a capital ratio of 54.8% and a voting ratio of 10%, its filing with Bursa Malaysia this evening showed.
 
"ACSP has the potential to become an established niche player in the non-banking financial services sector in the Philippines. The proposed subscription will enable the company to derive potential returns on equity investment in the future to contribute to the earnings of the company," the group.

The two parties had signed a share subscription agreement to effect the deal today. Aeon Credit said it will fund the purchase with internally-generated funds.
 
The capital infusion via the proposed subscription in ACSP will support its expansion of the installment financing operations, as well as the launch of a personal loan product, the expansion of its branch network, and an investment in its information technology systems.

To recap, Aeon Credit's parent company Aeon Financial Services Co Ltd signed an agreement on Dec 2012 with Philippine's Abenson Inc, Automatic Appliances Inc and BOT Lease Holding Philippines Inc to enter into a joint venture in the Philippines to operate as a financing company. The agreement also saw the four parties incorporating the JV company ACSP, on Feb 14, 2013.

Aeon Financial Service has a 84.5% stake in ACSP, followed by Abenson (10%), Automatic Appliances (5%) and BOT Lease (0.5%). ACSP provides hire purchase facilities for consumer durables such as electrical appliances and furniture.

Today's share subscription agreement is pursuant to obligations of the agreement that was signed between the parties.

For the financial year ended Dec 31, 2013 (FY13), ACSP recorded a net loss of 39.30 million pesos (RM3.07 million), while its net assets stood at 60.70 million pesos (RM4.74 million).
 
Shares in Aeon Credit has fallen by 18.48% or RM2.72 year-to-date to close at RM12 today, giving it a market capitalisation of RM1.73 billion.