Credit reporting agency CTOS Digital, which was listed on the stock exchange in Malaysia in July, is eyeing more acquisitions in the country and elsewhere in Southeast Asia as it expands its services for companies in the region.
The company, backed by Malaysian private equity firm Creador, has already deployed part of its IPO proceeds into acquiring stakes in top credit rating and credit bureau agencies.
“We’re looking for opportunities, both domestic and offshore,” CTOS CEO Dennis Martin told DealStreetAsia in an interview. “We’re looking for organisations that we can invest in, either as a minority or a majority [shareholder], that will assist in our customers’ growth.”
The company has earmarked some RM58.7 million, or about a quarter of its IPO proceeds, for acquisitions. Since its IPO, CTOS has acquired a 4.63% stake in Malaysian credit rating agency RAM Holdings for RM10.05 million; and raised its stake in Thai commercial credit bureau Business Online PCL (BOL), acquiring 2.65% for RM26.8 million.
CTOS had in June 2020 acquired a majority stake in Philippine credit reporting agency CIBI Information, but divested it before the IPO, as the company was lossmaking and required more investment.
Indeed, CTOS is actively in discussions to collaborate with potential digital banking licensees, Martin said.
“Because if you’re going to be doing lending, there are a few things you need to be able to do,” he explained. “You’d need to be able to attract and onboard customers, and you’d have to make assessments based on the previous history of that customer. We have that information.”
“We’re a digital organisation, all our information is digitally-enabled, so we fit right into their remit.”
For the nine months ended September 30, 2021, CTOS reported a 16% year-on-year rise in revenue to RM 114.4 million. Profit for the period rose 18% from the year before to RM 30.6 million.
CTOS was founded in 1990 by Chung Tze Keong and Chung Tze Wen as a credit reporting business. Martin joined the company in 2017, after nearly 40 years of experience in banking and credit reporting.
Creador acquired a majority interest in CTOS in 2014 through its second fund for RM 215 million. According to the company’s IPO prospectus, Creador, under its vehicle Inodes, held an 80% stake before the listing, and was selling 720 million shares. It will hold a 40% stake post-IPO, with a six-month lock-up period.
CTOS’ IPO was the second major exit for Malaysian private equity firm Creador in under a year, following the stellar listing of Malaysian home improvement retailer MR DIY in October 2020.
Investor interest in CTOS, as well as MR DIY, continues to be keen. Shares in CTOS have risen 65% from its IPO price, giving it a current market cap of RM4 billion. Shares in MR DIY are trading at more than double their price at IPO, giving the company a market cap of nearly RM 22 billion.
Edited excerpts of the interview with Martin:
