Revenue Group to acquire more assets

by NUR HAZIQAH A MALEK / graphic by TMR

REVENUE Group Bhd’s proposal to acquire 25% stake in an insurtech company and four plots of leasehold lands together with buildings erected are seen as positive announcements which is likely to help build on its performance.

Hong Leong Investment Bank Bhd analyst Tan J Young has a ‘Buy’ rating on the counter as a result and has been maintained with an unchanged target price of RM2.28.

“The properties are expected to allow Revenue Group to consolidate its operations under one roof yielding efficiency gain, at the same time strengthen its business continuity planning strategy.

“As a business-to-business-to-client (B2B2C) software as a service provider, Revenue Group would be able to form partnerships with various digital players to enjoy long term recurring revenue streams,” he stated in a note yesterday.

He added that the acquisition of Vsure Tech Sdn Bhd (VTSB) will facilitate Revenue Group to further expand and develop a more robust B2B2C environment by providing innovative products and services to its clients, such as on-demand insurance, catering to the special needs of individuals and businesses.

“VSTB is currently using ipay88 to process online transactions and we strongly believe with this stake acquisition, Revenue Group will take over this role.

“VTSB’s existing higher ticket-size products along with upcoming volume-driven customisable and affordable on-demand products will further boost its core exchange traded product business,” Tan noted.

He added that the acquisition of properties by Revenue Group will enable it to expand, consolidate and house all its subsidiaries’ admin, operations and technical team under one roof.

“Subject to the relevant authorities’ approval, Revenue Group intends to convert the properties into a mixture of offices and warehouses with a focus on providing the facilities, logistics hub, offices and operations hubs for small and medium enterprises (SMEs) and micro-SMEs,” he said.

Following the relocation, Revenue Group intends to convert the existing headquarters into a disaster recovery centre as part of its strategy to serve as a back-up centre for its technology infrastructure and data centre.

Revenue Group has a share sale and purchase agreement with vendors to acquire 2.5% of VTSB’s entire current issued share capital for a cash consideration of RM1.2 million as well as the share subscription agreement with the same company for 23% of the enlarged issued share capital for a sum of RM10.8 million.

The insurtech acquisition would be funded with internally generated funds, and following the acquisition, Revenue Group would be the second largest shareholder of VTSB with 25% stake in total.

VTSB is principally engaged in the business of digital insurance platform, provision of management and consultancy services over the Internet and insurance technology and is a licensed digital insurer under Bank Negara Malaysia Fintech Sandbox Framework.

The price tag was arrived at on the back of the vendor’s two-year financial year 2022 to 2023 projected earnings before interest and tax guarantee of RM3.7 million.

The property acquisitions of four plots of leasehold lands alongside buildings in Kuala Lumpur for RM44 million cash from Starplus Corp Sdn Bhd, will likely be 90% funded with bank borrowings and the remaining 10% with internally generated funds.