N2N partnership with Japan-based SBI a strategic development
KUCHING: N2N Connect Bhd’s (N2N) proposed partnership with Japan-based financial technology (fintech) company SBI Holdings Inc (SBI) has been viewed as a strategic alliance, with exciting developments in store for N2N if the proposal falls through.
In a filing, N2N announced a proposal to undertake a private placement of 52 million new ordinary shares in N2N, representing 10 per cent of the total number of issued shares in N2N (excluding treasury shares), to SBI at an issue price of RM1.25 per placement share.
“While the placement dilutes (N2N’s) earnings per share (EPS) by one to two per cent, we believe exciting developments from a potential strategic alliance are likely to follow – which have not been factored in pending further clarity on the financial impact,” AmInvestment Bank Bhd’s research arm (AmInvestment) said, in a report.
It noted that the issue price has been fixed at RM1.25 per share, which represents a 13 per cent premium to the five-day VWAP – a testament to N2N’s deep value.
The exercise is expected to raise net proceeds of about RM65 million, which would be utilised entirely for business expansions within two years.
Of note, SBI, first incorporated under the name of SoftBank Investment Corporation, was the finance arm of technology behemoth SoftBank Group until it was sold in 2006.
SBI’s current CEO Kitao Yoshitaka served as the CFO of SoftBank and he is said to have led some of the high-profile investments like Alibaba Group, Yahoo Japan and E*Trade Japan.
AmInvestment said, SBI operates multiple businesses including banking services, insurance and securities brokerage. In addition, its asset management arm invests in IT, biotechnology and other finance-related businesses.
It added, as of its financial year 2017 (FY17), SBI had the highest share of individual stock trading value in Japan.
“The proposed exercise is motivated by the intention of forming strategic business alliances between N2N and SBI.
“The collaboration is aimed at expanding N2N’s regional footprint and expedite the set-up of an ‘Asia trading hub’.
“In addition, the collaboration allows N2N to tap into SBI’s large network of brokers and its headway in the fintech such as blockchain,” the research team said.