Here’s the latest update on IOUpay’s investment in Malaysian finance business

Published on December 01, 2021 03:27 PM AEDT
Updated on December 01, 2021 03:28 PM AEDT

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IOUpay to acquire a 42% interest in IDSB — Image source: Copyright © 2021 Kalkine Media

Highlights

IOUpay is advancing with its planned investment for a 42% interest in IDSB, a Malaysia-based company operating a financial services business.

The satisfaction of all the required conditions enables IOU to complete its first tranche payment towards the investment.

The second tranche payment is scheduled within six months after settlement.

IOUpay Limited (ASX:IOU) has released an upbeat update on its investment in Malaysian finance company I.Destinasi Sdn Bhd (IDSB).

The fintech company has satisfied all the required conditions to complete the first tranche of its investment. The development comes after the last remaining condition precedent relating to a third-party consent from one of the banking partners of IDSB was satisfied.

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In September this year, IOUpay executed binding documents to acquire 42% of the total issued capital of IDSB for cash consideration of approximately AU$41.3 million. IDSB is a Malaysia-based private company, which operates a financial services business centred to provide instalment-based consumer credit services to civil servants for and on behalf of Malaysian banks.

The investment in IDSB represents a non-controlling interest in a business uniquely and strategically aligned with IOUpay.

First Tranche Payment Completion

IOUpay has highlighted that in terms of the Share Purchase Agreement between the parties, the first tranche completion will be affected within five business days of settlement.

Moreover, the payment to the vendors of the purchase price concerning the transfer to IOUpay (Asia) Sdn Bhd, a wholly owned subsidiary of IOUpay, represents 21% of the total issued capital of IDSB.

Purchase of the first tranche shares, which represent 50% of the purchase price, is being funded by a payment of ~AU$20.7 million from existing cash holdings.

Second Tranche Payment

The second tranche payment is scheduled after the audit of IDSB’s FY21 statutory accounts or within six months after settlement. However, IOUpay reserves the right to bring forward that tranche if it wishes.

The Company will assess its cash position and the market closer to the due date for the second tranche payment and decide on the funding of that payment. This payment is likely to be funded by way of equity capital raising or the Company's existing cash reserves at the time or a combination of both.

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IOUpay undertook a major step ahead with the completion of first tranche payment, representing 50% of the purchase price. The strategic investment into IDSB is expected to provide IOUpay with prospective value-added benefits, allowing the Company to explore several opportunities.

IOU shares were trading at AU$0.175 at AEST 03:16 PM on 1 December 2021.