KUALA LUMPUR (Dec 24): CTOS Digital Bhd has proposed to buy a 49% stake in fintech specialist Juris Technologies Sdn Bhd (JurisTech) for RM205.8 million, cash, the group’s largest-ever acquisition since its inception.

In a statement, the credit reporting agency said it has inked a conditional share sale and purchase agreement for the proposed acquisition from Natsoft (M) Sdn Bhd, the holding company controlled by JurisTech founders, and that the buy is pending approval of its shareholders in an upcoming extraordinary general meeting (EGM).

According to CTOS Digital, JurisTech is a leading Malaysia-based fintech company that specialises in enterprise-class software solutions for banks, financial institutions, insurance, and telecommunication companies.

The company provides a complete suite of integrated software solutions covering end-to-end credit lifecycle management and holds an entrenched market position in Malaysia, with presence in countries such as Singapore, Australia, United Arab Emirates and Brunei.

"Our acquisition in JurisTech will allow both companies to complement each other’s strength to bring a stronger end-to-end digital lending solution proposition to the market by combining best in class credit data, software solutions and analytics services, subsequently establishing ourselves as a one-stop solution for financial institutions," said CTOS Digital deputy group chief executive officer Eric Hamburger.

“Our partnership is also well positioned to address the new emerging opportunities in the digital lending space, as we seek to co-develop various new and unique propositions to cater to the needs of these customers, including digital banks, peer-to-peer, buy-now-pay-later and micro/pay-day loans providers," Hamburger said.

He expects there to be many customer synergies, as the companies leverage the relationship with their respective customer bases to cross-sell their solutions and elevate their existing solutions. "This would help both companies to penetrate new clientele as well as increase the wallet share of existing customers,” he added.

As example, Hamburger said CTOS Digital aims to leverage JurisTech’s strong presence in Islamic banks and co-operatives, and that JurisTech could assist in further increasing CTOS Digital’s wallet share on other banks in Malaysia that use JurisTech’s products as a core solution.

In return, JurisTech will be able to tap into CTOS Digital’s existing customer base of financial institutions, telecommunication companies, fintech players, and a wide base of small and medium enterprises.

Meanwhile, JurisTech’s CEO and co-founder See Wai Hun said the company wants to revolutionise the way financial transactions are done.

“In future, we see banks, financial institutions, fintech companies and any institution wanting to embed finance into their offerings move from being product-focused to becoming more service-centric, where user experience can be hyper-personalised and services can be composed based on contextual needs of each individual customer.

“This is only possible if technology is combined with data and the right ecosystem to create value towards the customer experience. This partnership with CTOS Digital will propel us to fulfil our vision of delivering frictionless financial transactions and drive greater financial inclusion and technology innovation in credit decisioning,” she said.

The acquisition is expected to be completed by the first quarter of 2022. To fund the purchase, CTOS Digital plans to undertake the private placement of new shares, representing up to 10% of its current 1.1 billion outstanding shares. The group will also explore bank borrowing options if necessary.

Separately, in a bourse filing, CTOS Digital has also proposed to raise its stake in Business Online Public Company Ltd (BOL) from 22.65% currently by 2.25% to 24.9%, to increase its share of profits from the largest company information bureau in Thailand, with an estimated 59% of market share in terms of annual revenue.

“As the single largest shareholder in Thailand’s leading provider of business information and analytical tools for business decision-making, the proposed additional BOL acquisition solidifies CTOS Digital’s position as a regional market leader for credit bureaux in the ASEAN region,” it said.

The 2.25% stake will be acquired from the open market or through direct negotiations — over a one-year period once it acquires shareholders' approval to do so — at no more than THB15 per share, for a total cash consideration of THB276.9 million (equivalent to RM34.9 million).

The additional equity stake will also be funded using proceeds to be raised by the proposed placement of new CTOS Digital shares, and that it will be seeking shareholders' approval at the same EGM for a mandate to issue new CTOS Digital shares of up to 10% of its total issued shares. 

If the proceeds are insufficient to cover the BOL acquisition, CTOS Digital plans to procure bank borrowing.

CTOS shares finished unchanged at RM1.73 on Friday, giving it a market capitalisation of RM3.81 billion.