Creador makes SE Asia e-payment breakthrough

When the firm finally identified a viable target, it moved quickly: the deal announced this week that will see Creador take a 20% stake in GHL Systems, effectively part-bankrolling the Malaysia-based payment provider's acquisition of e-pay Asia, closed after only about two weeks of negotiations.

The rationale behind combining GHL and e-pay Asia is that it creates a larger and more comprehensive electronic payment platform. While GHL provides equipment, infrastructure and related services that underpin cashless transactions between shoppers, retailers and banks, e-pay Asia specializes in electronic top-up services for prepaid mobile phone users.

The two companies have operations throughout Southeast Asia - GHL in Malaysia, Thailand and the Philippines and e-pay Asia in Malaysia, Pakistan and Thailand - but their major market is Malaysia. The combined entity would have 60,000 electronic data capture (EDC) terminals in this country alone.

Malaysia has a population of around 30 million, 61% of which is online. According to research by industry association Mobile Monday, there were more than 42 million mobile subscribers as of the first quarter of 2013 - 80% of them prepaid - and 8.2 million credit cards in circulation. Nielsen projects Malaysia's e-commerce market will be worth MYR5.76 billion ($1.8 billion) by 2015, nearly three times the 2011 figure.

GHL is willing to pay A$0.40 per share in cash for all outstanding shares in e-pay Asia, valuing Australia Securities Exchange-listed company at approximately A$22.8 million ($21.6 million). Alternatively, investors can elect to receive 2.75 shares in GHL for each e-pay share they hold.

It helps that the two companies already have a shareholder in common. Simon Loh, e-pay Asia's co-founder and executive vice chairman, owns 61.5% of the company. An entity he controls has pledged 19.99% of e-pay Asia's total outstanding shares in support of the deal with a view to converting them to GHL shares. Loh is also a non-executive director at GHL since 2010 and has a 26.7% interest in the company.

Creador's check size depends on how many e-pay Asia shareholders opt to cash out rather than convert, but it is expected to be $12-15 million.

E-pay Asia reported a net profit of A$2.1 million in 2012 against revenues of A$11.4 million. GHL, meanwhile, posted a profit of MYR4.4 million for the year with revenues of MYR53.5 million.

With the exception of Northstar Group-owned Nera Telecommunications, which has an electronic payment systems division, Vasudevan says Creador didn't find any companies active in Malaysia, Thailand and the Philippines with more than $10 million in revenue.

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• Topics
• Financials
• Technology
• Southeast Asia
• Expansion
• Financial Services
• Growth capital
• Creador
• Southeast Asia
• TMT