This article first appeared in The Edge Financial Daily on June 7, 2018

KUALA LUMPUR: Japan’s financial services group SBI Holdings Inc is taking a 10% stake in ACE Market-listed N2N Connect Bhd via a private placement for RM65.05 million or RM1.25 per share.

N2N said it plans to use the proceeds raised from the proposed private placement to enter into business alliances with SBI Group, which may include acquisitions of strategic investments and/or entering into strategic collaborations, joint ventures or alliances.

The proposed business alliances will largely be complementary to N2N’s existing business, it added.

“The company is currently in discussions with SBI Group on the proposed business alliances involving leveraging on the financial technology (fintech) and brokerage networks of the parties. The proposed business alliances are expected to contribute and expedite N2N’s plans to build an ‘Asia Trading Hub’ that would connect all their panel brokers across eight to 12 countries,” N2N said in a filing with Bursa Malaysia yesterday.

“At this juncture, the terms and conditions of the proposed business alliances have yet to be finalised or agreed upon. The relevant announcements will be made upon finalisation of the terms of the proposed business alliances or N2N having entered into any agreements in respect of the proposed business alliances,” it added.

The proposed private placement entails 52.04 million new shares or 10% of the company’s issued shares to SBI at an issue price of RM1.25 per placement share, representing a 12.61% or 14 sen premium to the five-day volume weighted average market price of N2N shares up to and including June 5 of RM1.11.

N2N said the proposed exercise enables the company to strengthen its equity base and balance sheet as its shareholders’ funds are expected to increase to RM252.99 million from RM189.52 million as at Dec 31, 2017.

“The utilisation of the proceeds from the proposed private placement is expected to contribute positively to N2N Group’s future earnings,” it added. N2N said barring any unforeseen circumstances, the proposed private placement is expected to be completed by the second quarter of 2018.