KUALA LUMPUR (Feb 23): CTOS Digital Bhd has finalised the issue price of its proposed primary placement exercise at RM1.58 per share to raise a total of RM173.8 million.
This comes after the group received approval from shareholders for its proposed placement to raise up to RM270 million — based on an indicative price of RM1.62 each — by placing out as many as 166.7 million new shares that represent up to 10% of its issued shares, to fund future acquisitions.
In a statement, CTOS said its board decided to raise only RM173.8 million by placing out 110 million shares representing 5% of its share base to optimise the amount of equity and debt to fund the company's acquisitions, and to defray the estimated costs associated with the proposed placement.
“The proposed placement was oversubscribed. More importantly, CTOS is marking an eventful start to the new year, firstly by obtaining shareholders’ approval for our largest acquisition ever in JurisTech, and subsequently gaining investors’ confidence for this placement exercise. This support certainly spurs us forward in our growth plans as outlined in our strategic roadmap,” it said.
The issue price per share of RM1.58 represents a 6.5% discount to the five-day volume weighted average price (VWAP) of CTOS shares, up to and including Feb 21, 2022, being the market day immediately prior to the price fixing date.
The RM173.8 million proceeds will be used to partially fund the group's acquisition of a 49% stake in fintech specialist Juris Technologies (JurisTech), which amounts to RM205.8 million, with the balance to be funded through bank borrowings. The acquisition is expected to be completed in the first quarter of 2022.
Following the listing of the new shares in early March 2022, CTOS Digital's issued share capital would increase from 2.2 billion shares to 2.31 billion shares.
The group added that its management has internally targeted strong growth in the group’s net profit by up to 30% circa RM75-RM80 million in the current financial year ending Dec 31, 2022 (FY2022), buoyed by new contributions from JurisTech, as well as the stronger uplift in its existing businesses in line with the rebounding economy.
“We believe we are only at the cusp of a new growth phase and are optimistic of our prospects going forward,” it said.
Due to strong demand for the placement, private equity firm Creador, via Inodes Ltd, placed 185 million shares it owns in CTOS at the same price of RM1.58 — its first placement since the company went public in July last year.
CTOS said this brings Inodes' stake in the group down to 30.1% from 40% after the primary placement.
"We do not envision any further sale in the foreseeable future and remain excited about the long-term growth of the company," Creador said in the same statement.
"The firm sees tremendous growth opportunities in new product solutions for key accounts and higher penetration of [the] small medium enterprise (SME) market. In addition, Juris brings new solutions which are relevant to CTOS and there are significant synergies," it said.
Creador also noted that CTOS has a clear and strategic growth roadmap to capitalize on the digital and credit information opportunities in ASEAN.
"With the strong macro tailwinds and some of the industry's most experienced talents in its senior leadership team, we are confident the company will be able to maximise these opportunities and meet growth expectations in the coming years. We are therefore committed to remaining a long-term investor, which will allow us and the investors we represent to realise consistent and sustainable returns in a fast-growing category,” Creador added.
CTOS shares fell seven sen or 4.14% to close at RM1.62 on Wednesday, giving the company a market value of RM3.56 billion. The stock has declined 12.9% year to date from RM1.86.
Source: https://www.theedgemarkets.com/article/ctos-trims-proposed-placement-size-and-fixes-issue-price-rm158-raise-rm1738m