Fantastic news for the investment industry and those seeking financing!
XOX Bhd, one of top e-wallet licence holders in Malaysia is providing up to RM1 billion in microfinancing to its 2.2 million subscribers, basically to all entrepreneurs and small business owners who require financing to either sustain or expand their business.
Its subsidiary, XOX Media Sdn Bhd has inked a partnership agreement with Wetek Technology (M) Sdn Bhd, which has committed RM1 billion in financing for this.
The directors of Wetek are Liang Zeng and Howard Leung and they have good background and financial capability to make this deal work for Malaysians.
According to the New Straits Times (NST), both the companies may issue a second tranche after the successful take-up of the initial RM1 billion.
Micro-finance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services. The two company’s entry into this business is timely given that there are hardly any banks lending in this current crisis.
The business community must be proud and happy that XOX is doing this now to alleviate their financial burden.
The NST qouted XOX CEO Ng Kok Heng stating that the company is moving into this direction to provide entrepreneurs and small business owners access to capital and expand their business.
XOX will ride on its 2.2 million customer base for the business and the customer base is growing everyday. XOX had a year ago proposed a rights issue with free warrants to raise up to RM66 million to fund its e-wallet and electronic SIM (e-SIM) businesses expansion.
The company had allocated RM33 million of the proceeds raised from the rights issue to expand its e-wallet function by developing a new mobile application to support micropayments, the issuance of Mastercards and peer-to-peer e-money transfers.
Some RM15 million was set aside for its e-SIM expansion as an alternative to the traditional SIM cards.
In a statement, Leung Hao, who is also chairman and CEO of Brilliant (Hong Kong) Holdings Ltd said the company formed a partnership with XOX to ride on the latter’s strong subscriber base.
He said that apart from over 2.2 million subscribers, XOX has strong infrastructure in its dealership channels and technology to grow the relatively unserved market in Malaysia.
“This is a huge opportunity for Wetek to grow in this business. Globally, the microfinance industry had serviced 139.9 million borrowers in 2018, and 65 per cent of microfinance borrowers live in rural areas where traditional banking and lending is difficult or impossible.
According to Microfinance Barometer 2019, this industry has been growing at an annual rate of 11.5 per cent over the past few years and projected to reach US$146.8 billion by 2021,” he said.
“Micro financing is a good strategy to populate eWallet with funds especially in the challenging environment of eWallet adoption nationwide. Once eWallet subscribers have money in the ewallet, they can perform transactions through XOX Digital ecology,” he added.
Wetek aims to be a market leader of micro-financing in Southeast Asia and it may rope in XOX for its expansion in the region. This RM1 billion deal will surely and definitely boost XOX’s future earnings.
The stock traded very actively today with 622 million shares exchanging hands. It went up to as high as 12.5 sen today and closed the day at 10.5 sen.
