GHL bids for ePAY

04.10.13 / Author:

GHL Systems Berhad (“GHL”), a company listed on Bursa Malaysia Securities Berhad, proposes to a make a takeover offer to acquire all of the shares in e-pay Asia Limited (“EPY”), a company that is listed on the Australian Stock Exchange. The offer is subject to shareholders and regulatory approval.

Under the terms of the Offer, EPY shareholders can opt for either cash consideration or exchange their shares in EPY for shares in GHL. EPY shareholders that elect to receive cash will receive AUD0.40 per EPY Share. Alternatively, EPY shareholders that elect to receive GHL shares will receive 2.75 GHL shares for every EPY share held by them based on a valuation of MYR0.44 per GHL share. The deal effectively values EPY at MYR69 Million. The proposed offer price per EPY Share represent a 6.67% premium to EPY’s closing share price of AUD0.375 on 3rd October 2013, the day prior to this announcement.

Both GHL and EPY have core businesses that centre around the provision of payment services. While GHL is mostly focused on providing such services to Banks and Merchants, EPY is focused on providing such services to Telco companies and Merchants. EPY also has a strong consumer facing brand in the form of “e-pay” which is associated with a variety of consumer payment products.

“This acquisition enables EPY to solidify our position in Malaysia to be the undisputed No 1 payment service provider under the e-pay brand through cross selling of our services across GHL’s merchant base. In addition, we will be able to package our solutions with GHL’s payment solutions to provide a more compelling proposition as we aggressively tackle the regional markets” say Danny Leong, CEO of e-pay (M) Sdn Bhd.

As EPY contracts directly with Merchants for the provision of its services, this significantly adds to GHL’s existing Transaction Processing Acquisition (“TPA”) business segment. Also, on a combined basis, the enlarged Group would have an EDC terminal network of about 60,000 terminals in Malaysia alone.

This opens up great opportunities to increase revenue through the cross-selling of products and services both in Malaysia as well as regionally, where GHL has a stronger presence.

“This deal allows us to bag several birds in one shot” says Raj Lorenz, CEO of GHL. “We have been clear in our desire to grow our existing TPA business and this acquisition allows us to enlarge our market share in this segment much more quickly. From a customer perspective, the acquisition balances our annuity business much more evenly between Banks, Telcos and Merchants. Also, aside from giving us scale, it consolidates our position as ASEAN’s leading payment services provider.

GHL will also be seeking shareholder approval to undertake a 20% private placement of new shares of GHL’s enlarged share capital to Cycas, a unit of Creador II, LLC (“Creador”). Creador is a private equity fund focused on growth capital investments in Southeast Asia. Proceeds from the private placement will partly finance the acquisition of EPY. Mr Brahmal Vasudevan, CEO of Creador said “We’re delighted to be partnering with GHL on their exciting growth plans in the electronic payment industry in Southeast Asia. We believe the electronic payment industry in Southeast Asia will see strong growth given the favorable demographics, low penetration and push from governments for more cashless transactions”.

About the GHL Group

GHL Systems Berhad is a leading payment solutions provider in the region, deploying world-class payment infrastructure, technology and services. The Group provides integrated end-to-end payment solutions encompassing physical and virtual payments on sale and rental basis, including Electronic Data Capture (EDC) terminals compliant to the Europay-Mastercard-Visa (EMV) platform, contactless readers, network access routers, and online payment gateways.

With a full suite of payment solutions, GHL Systems has also successfully established a customer base beyond Malaysia, with key operations in Thailand, Philippines and Australia.

GHL Berhad has been listed on Bursa Malaysia since 2003 and was transferred onto the Main Board in 2007. The group’s market capitalization as at 3rd October 2013 was RM87 million.

For more information on GHL Group kindly visit www.ghl.com.

About e-pay Asia Limited

e-pay Asia Limited (“EPY”) is the pioneer electronic payment service provider in South East Asia. EPY’s electronic payment service was first launched in Malaysia in 1999 and today, it has the largest retail network with more than 18,000 point of sales in Malaysia. EPY provides mobile prepaid, online games and eWallet top ups as well as bill and content payment services.

EPY is listed on ASX and has a market capitalization of AUD21.35 million as at 3rd October 2013.

For more information about EPY, please visit the company’s website at www.epay-asia.com.

About Creador

Creador is a private equity firm focused on long-term investments in growth-orientated businesses in Indonesia, Malaysia, Singapore and India. These markets benefit from a young and growing population, lower but rising GDP per capita and a rapidly growing middle class. Creador’s deep understanding of these markets enables the Fund to recognize and tap into promising opportunities for long-term value creation. Some of Creador’s recent investments include Bonia, a leading Malaysia-based fashion brand, Simba, the 2nd largest cereal player in Indonesia and BFI Finance, one of the most diversified multifinance company in Indonesia.

More information about Creador can be found at www.creador.com