KUALA LUMPUR: Northstar Group, a Singapore-headquartered private equity (PE) firm, is eyeing to buy a third of AppAsia Bhd from the latter's ultimate shareholder for 55 sen a share.
Northstar, which manages more than US$2.2 billion of equity capital dedicated to investing in growth companies in Southeast Asia, planned to take AppAsia private, said a person with knowledge of the matter.
It is understood that the ultimate shareholder of AppAsia is Yuk Tung Group.
The current dominant shareholder of AppAsia is a top associate of the privately-held Yuk Tung, the source said.
"The offer will include not only the mother shares, but also both AppAsia warrants. Based on AppAsia's closing price on Friday, the combined market value per unit of the mother shares and warrants is 28.5 sen," the source added.
Since its founding in 2003, Northstar has raised five private equity funds and invested in more than 35 companies including Gojek, according to its website.
The companies come across the banking, insurance, consumer/retail, manufacturing, oil and gas, coal and mining services, technology, telecom and agribusiness sectors.
Northstar's interest in AppAsia is due to the latter's 12-year electronic bank confirmation contract with the Malaysian Acounting Association (MAA) where it is charging RM15 per bank confirmation.
Apart from AppAsia, there was only one other company in the world providing similar e-confirmation platform independently on a commercial scale, that being the Thomson Reuters-owned Conformation, the source noted.
Conformation charges its customers a flat rate in US dollar, while AppAsia charges in ringgit.
Northstar was expected to bring the AppAsia platform to Singapore, Vietnam, Indonesia and the Phillipines in a big way, the source added.
"Northstar has the credibility to do so as it is the PE firm which has helped put Gojek, a small start-up from Indonesia, into a giant entity that it is today."
Despite offering the potential 55 sen per share, the source said Northstar would possibly get AppAsia shares cheaply as from 2022 and with proper marketting, AppAsia might gain RM15 million to RM30 million a year for the next 11 years from its monopoly of the MAA electronic platform.
"AppAsia is said to be anticipating all auditors and banks operating in Malaysia to adopt this fintech e-confirmation platform developed in-house and targets to process annual bank audit confirmations for 1.3 million companies that are registered with the Companies Commission of Malaysia," said rival PE firm Potential Excelerate Group in a report.
This would be in line with the digitalisation within the banking industry through initiatives such as DuitNow by Bank Negara Malaysia, added Potential Excelerate.
OneDelta, a home-bred analytics firm meanwhile, has given AppAsia its strongest and highest rating on record.
"Stock in booming mode can be traded very volatile, price can swing largely day-to-day. While having big upside potential, the downside risk can be huge if the stock is not meeting the market expectation," OneDelta said in a report, adding that AppAsia as a stock was "shooting to the moon".
Shooting to the moon is a term used by traders to describe a lowly priced stock which suddenly acquires a much higher premium than before.