Nexgram acquisition of Ire-Tex Corp, market consensus a positive boost

20th Nov 2015, Kuala Lumpur, Malaysia – Nexgram Holdings Berhad (“NEXGRAM”), part of entrepreneur Larry Tey Por Yee’s Malaysia investment vehicle, today announced that it has proposed to acquire packaging company Ire-Tex Corporation Bhd (“IRETEX”) which could cost over RM50 million is expected to boost its group financial performance in the long run.

In a statement to Bursa Malaysia on Friday, Nexgram had announced that it planned to do this through an equity swap based on 40 sen per Ire-Tex share, 1 sen per warrant and 5 sen per irredeemable convertible unsecured loan stocks (Iculs).

Based on market consensus, the deal is expected to close within the next two months, subject to regulatory and shareholders approval. This acquisition will increase NEXGRAM’s total assets under the group to over RM450 million, elevating NEXGRAM’s consolidated sales and profit to double in year 2016, or estimated RM250 million and RM20 million respectively.

Senior investment banker familiar with M&A dealings, commented: “This acquisition gives Nexgram an excellent opportunity to accelerate Ire-Tex’s growth strategy in Malaysia, which is already the country largest high-end packaging specialist serving American Fortune 500 customers, especially in renewable energy and aviation industries. Ire-Tex having their own research and development (R&D) lab stands out among conventional players. Malaysia’s Ringgit vs US Dollar arbitrage gave Ire-Tex pricing advantage, where most of their clients are from America, and regional orders would expect to experience healthy growth over the next few years which, fueled by growth in global renewal energy products demand, clearly indicates an increasing demand for industrial product packaging services.”

The banker added: “The professionalism and commitment of Ire-Tex’s consultants in earning their customers’ trust are impressive. Their success highlights that there is a market need for professional product packaging advice and logistic planning. Nexgram would likely aim to build on their strong foundation over the coming years and bring their technology and services to Nexgram’s presence across Asia. Both Nexgram and Ire-Tex will benefit and further enhance their success by leveraging on each other’s clientele and expertise in cross selling products and services, having instant access to each other’s world class clientele.”

Incorporated in year 2002, Ire-Tex currently has over 478 staff strength, and recently went through facilities consolidation and corporate restructuring plan in order to facilitate higher demand from multi-national customers. Book orders have been increasing the last few quarters. Despite a failed investment in LED project, the overall business growth is in line with market trend. The group hired professional consultants to improve the new factory process flows which went through smoothly under current management. The investment is expected to recover in coming year, together with kitchen sinking strategy to be implemented within year 2015, where market perceive as a smart move for a fast growing company which practices good corporate governance.

“When good solutions to cut down cost and slim down processes is implemented, there are savings to be made, which also means some interest parties may not be happy as money taken away from the system. That’s all about when comes to restructuring, nothing so special”, commented a senior partner of business consultancy firm.

As part of normal restructuring process, Ire-Tex management had hired independent professionals to study and audit on some dubious allegation believed to be pure corporate sabotage, with satisfactory results. An audit specialist commented “Ire-Tex attracts envy and jealousy where they stands out among other players having cutting-edge technology and outstanding customer services. It’s over done that they even hired professionals to do extra review to fine tune their own operation, but now it’s clear that every steps are within their plan, nothing to shout about when comes to commercial decision as long financial results could justify.” According to the review report, there is no financial impact along the house keeping process, despite the budget over run due to increase of capacity requirement on factory construction, which is normal for most custom-build factories. Other capital expenditures were already approved before the company went though a Right Issue exercise, hence there is no further approval required except update reports, and these are all normal operation matters and it’s procedural. “The good news is, the extra report just reassured their investors the company is on track to grow the business. It’s a smart choice that their investors invested in the team, market believes the long term reward would be exponential”, added the specialist.

A senior investment firm officer said “We are in a low business margin yet fast changing era and there are no pure solutions for achieving a well-diversified business model and fatal to rely on single source of income. Therefore, some cross industry investing is beneficial. With this transaction extending the reach of International clientele here in Malaysia, I believe Ire-Tex would look forward to leveraging Nexgram global expertise to bring the merged company to be a strong player in pursing sustainability in today’s competitive business environment.”

 

Other references:

http://klse.i3investor.com/blogs/nexgramgrouptracker/86710.jsp

http://www.thestar.com.my/Business/Business-News/2015/11/20/Nexgram-launches-takeover-of-Ire-Tex-Corp/?style=biz

 

Corporate arranger turn businessman Larry Tey Por Yee. How far reach is the network?

Some of the findings on Wikipedia shown that Larry Tey, the venture capitalist which invest in entrepreneurs and turns small start ups into public listed companies within a span of 17 years left with many untold stories.

It’s even more stunning to discover that Larry has assist dozens of companies to go public Internationally, across 4 continents, and has over 1,000 companies whom he invested for his own private equity and other friendly businessman turn investor.

The list on Wikipedia gave us a sneak peak of what Larry past projects:

• Tey Por Yee Shareholder of Nexgram (The Wall Street Journal)
• Tey makes waves in small-cap companies
• Tey Por Yee ups stake in Ire-Tex
• Winsun Technologies to have new CEO soon?
• A moment of money: 40 CEO in Malaysia
• Asdion Bhd Announces Ownership Interest Of Tey Por Yee
• Gamuda Bhd Announces Ownership Interest Of Tey Por Yee
• Nexgram, Angkasa bangunkan hartanah
• Angkasa to take up two Nexgram property projects for RM1.44b
• Nexgram Land eyes RM293m net profit via projects

Source: Wikipedia

Far Reach Rain-Making Corporate Dealings Behind The Scene?

Some of the articles also shows some links between the professionals such as company secretary, investment bank and corporate merger and acquisition advisory firms Larry and his professional corporate associates have been dealing with.

On 13 May 2014, a newspaper The Star reported about Larry Tey’s investment vehicle as follows:

PETALING JAYA: YLI Holdings Bhd’s major shareholder Tan Sri Syed Mohd Yusof Syed Nasir has sold his entire 30.04% stake in the company to Suasana Karisma Sdn Bhd, a company controlled by some members of the existing management of the pipe manufacturer.

The transaction was effected through a married deal last Friday where Suasana Karisma acquired Syed Yusof’s interest of 29.57 million shares at RM1.10 per share, valuing the deal at RM32.53mil.

Syed Yusof is the chairman of YLI. It is still unclear whether he will stay on YLI’s board as chairman following the latest transaction.

Syed Yusof is better known as the franchise holder of Hard Rock Cafe in Malaysia. His entry into YLI in 2007 had sparked speculation that the pipemaker would be a beneficiary of the construction of the Langat 2 water-treatment plant in Selangor. The project, however, has yet to take off.

Syed Yusof, who was appointed as YLI chairman in August 2007, had emerged as a substantial shareholder in YLI shortly before that with a 30% stake in June 2007.

According to reports, he had acquired the stake from the Loh family at RM2.90 per share, valuing the deal at RM86mil.

Suasana Karisma’s substantial shareholders are YLI’s present managing director Datuk Samsuri Rahmat and executive director Ali Sabri Ahmad, statements to Bursa Malaysia showed yesterday.

Samsuri, who was formerly YLI’s chief operating officer, was appointed its managing director in June 2008.

He had held various key positions in the public sector for 16 years before joining the private sector in 1996. Prior to joining the company, he was the executive vice-chairman and executive director of TRIplc Bhd.

Ali Sabri, meanwhile, was appointed the company’s executive director in June 2008. He has more than 20 years experience in major construction projects in Malaysia and abroad.

Further details on Suasana Karisma obtained from the Companies Commission of Malaysia showed that its other listed shareholders are Shairah Begum Kadar Bashah and Fatimah Sulaiman.

Suasana Karisma is categorised as a land and property investment holding company with a paid-up capital of RM2 which was registered in January last year.

Interestingly, Shairah Begum and Fatimah in late 2012 had also emerged in Protasco Bhd with a 27.11% stake via Kingdom Seekers Ventures Sdn Bhd, which is also registered as a land and property outfit.

Source: Syed Yusof sells entire 30% YLI stake to Suasana Karisma for RM32.53mil

ACQUISITION OF 100% EQUITY INTEREST IN IVORY BENEFIT SDN BHD BY ENGTEX GROUP BERHAD

Introduction

The Board of Directors of the Company wishes to announce that Engtex Group Berhad (“Engtex”) had on 4^th February 2013 acquired two (2) ordinary shares of RM1.00 each (“Shares”) representing 100% equity interest in Ivory Benefit Sdn Bhd (Company No. 1024158-A) (“IBSB”) from Shairah Begum binti Kadar Bashah and Fatimah binti Sulaiman for a total cash consideration of RM2.00 only (“the Acquisition”). The purchase consideration were based on the par value of the Shares in IBSB and were funded by internally generated fund.

Following the Acquisition, IBSB becomes a wholly-owned subsidiary of Engtex.

Source: ACQUISITION OF 100% EQUITY INTEREST IN IVORY BENEFIT SDN BHD BY ENGTEX GROUP BERHAD

SINGAPORE POST LIMITED

(Incorporated in the Republic of Singapore)

(Company Registration Number: 199201623M)

ACQUISITION OF SUBSIDIARY

The Board of Directors of Singapore Post Limited (the “Company”) wishes to announce that General Storage Company Pte. Ltd. (“GSC”), an indirect wholly-owned subsidiary of the Company, had on 20 December 2013 acquired 2 ordinary shares of RM1 each representing 100% equity interest in Collective Developers Sdn. Bhd. (“CDSB”) from Shairah Begum binti Kadar Bashah and Fatimah binti Sulaiman for a total cash consideration of RM2 (or approximately S$0.75 based on the exchange rate of RM2.59 to S$1, which exchange rate is used hereinafter) (the “Acquisition”). With the Acquisition, CDSB has become an indirect wholly-owned subsidiary of the Company.

Source: Singapore Post acquisition of Collective Developers Sdn Bhd

Googling as the “main source” of reference for financial journal. Outrageous or irresponsible?

Interesting as it is, these trails leaves Larry Tey’s corporate associates dealings in long history of corporate deals behind the scene looks far reach. Which banker doesn’t? Not only it’s normal for corporate dealers and businessman to do deal – which is their duty, the journalist found them fancy as news worthy as celebrities and sports heroes. The habit to quote “other people’s quote” is strangely being practiced and forced to accept by readers, which includes the authorities or law makers as a (lazy) way to build references. What a joke, in deed, accept the fact that this is the Internet world we all live in the 21st century.

Subsequently, following these pick-and-use culture, another Malaysia financial publication, The Edge Daily, on October 2015 (more than 1 year after The Star statement), quoted on similar trails, which quoted Larry’s name as the finger print of many corporate deals, including some of government linked corporate dealings, and Google search saw deals involved Singapore Post as one of the client. Singapore Post, a blue chip Singapore government linked corporation (GLC)? Before we know the actual story, would it be interesting how “far reach” Larry had his dealings stretched, not only Malaysia but also Singapore GLCs?

If indeed he is the rainmaker, it would be pity that one of his deal was twisted to feed the greed of of his client (business partner) in construction business, and caused his name some damages. After all, it looks like Larry was doing deals nothing different from other businessman. For all we know, this could be just one of the bad deal Larry had, and he may care less by looking at the scope of dealings he involves. It’s piece of the puzzle for all these corporate dealers, and welcome to corporate world.

Larry Tey Por Yee’s View of What It’s called Conglomeration – a Tata Group shareholding Maze Tells the Story

It’s more of an obsession besides inspiration of what a session with a visionary businessman turns out to be mind blowing eye opener. When the author tries to find out what the mysterious businessman Tey Por Yee, or better known as Larry Tey business network looks like, the discovery is stunning – the entrepreneur was told having seed invested in over 1,000 start ups and businesses, globally. This have not counted the investment portfolio and projects his business associates handle for their clients. How complicated is it when comes to 21st century business conglomeration?

Surprisingly, the discovery of Larry’s businesses also brought up similarities compared to other mystery business conglomerate – such as Tata group. Such maze alike organization structure was discovered during the conversation with International bankers, and here is how Tata group of companies shareholding looks like.

If business today is to compete with speed and information, the web of business resources would explain why certain companies move faster than the others, including the synergies they brought that beat the other players – a group of hundreds of elephant (size businesses) crossing the river,  the market would feels the earth shaking!

Here is another copy of intelligence found on the Internet showing similar shareholding maze in automotive industry.

Interesting or stunning? What the market knows about global business network could be just tip of the iceberg. It’s more complicated than one can imagine.

Here are some more examples of what shareholding structures, or so called conglomerate business network looks like.

The Japanese way of money trail and business flows. Don’t get to excited. Here is more.

The European way of conglomeration and fund flows network. Spain largest business group shareholding structure could move the mountain when comes to funding.

Here is the American way of alliances and deal flows. Interesting? They conquest the global merger and acquisition landscape.

So what is so special and excited about what ordinary people like myself perceive and judge Larry’s business network? My studies above really open my eyes and view of the sophistication these conglomerates could handle. Perhaps they just evolved naturally and simple minded, not as complicated as we though.