Creador to take 20% stake in Malaysia’s GHL, back E-pay acquisition

07.10.13 / Author: Tim Burroughs, Asian Venture Capital Journal

Creador will take a 20% stake in Malaysia-based payment services provider GHL Systems through a private placement of new shares. The capital will in part be used to finance GHL’s proposed acquisition of Australian Securities Exchange-listed e-pay Asia.

This is the first disclosed investment from Creador’s second fund. The vehicle, which backs companies in Southeast Asia and India, reached a first close of $105 million in August. It has a full target of $250 million.

According to a regulatory filing, GHL is willing to pay A$0.40 per share in cash for all outstanding shares, valuing e-pay Asia at approximately A$22.8 million. It represents a 6.67% premium to the stock’s October 3 closing price. As an alternative to the cash consideration, e-pay’s owners can elect to receive 2.75 shares in GHL for each e-pay share they hold.

Simon Loh, co-founder and executive vice chairman of e-pay, has already committed 11.4 million shares he controls in the company – 19.99% of the total issued share capital – in support of the offer. Should the transaction go through, this stock would convert into GHL shares. Loh has been a non-executive director of GHL since 2010.

Launched in Malaysia in 1999, e-pay provides electronic top-up services for mainly prepaid mobile users as well as selling software services. It has a network of retail agents with more than 18,000 points of sale nationwide.

GHL provides end-to-end payment solutions, including electronic data capture (EDC) terminals, contactless readers, network access routers and online payment gateways. It has operations in Thailand, the Philippines and Australia as well as in Malaysia. The company trades on the Bursa Malaysia and has a market capitalization of around MYR87 million ($27.3 million).

A combined GHL and e-pay entity would boast 60,000 EDCs in Malaysia alone.

Raj Lorenz, CEO of GHL, said the acquisition was in keeping with the company’s desire to grow its transaction processing acquisition space, consolidating its position as the leading payment services provider in the ASEAN region.

“We’re delighted to be partnering with GHL on their exciting growth plans in the electronic payment industry in Southeast Asia,” added Brahmal Vasudevan, CEO of Creador. “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.”