Overview
Headquartered in in Kuala Lumpur, Malaysia, MOL Global ($MOLG) is the largest e-payment enabler for online goods and services in Southeast Asia by payment volume, according to the Frost & Sullivan report.
Seven other companies are scheduled for the week of Oct. 6, 2014. The full IPO calendar is available at IPOpremium.
MOLG scheduled a $267 million IPO with a market capitalization of $911 million at a price range midpoint of $13.50 for Thursday, Oct. 9, 2014, on Nasdaq. SEC filings
Manager, Co-managers: Citi, Deutsche Bank, and UBS Investment Bank.
Joint-managers: CIMB-GK Securities
End of lockup (180 days): Tuesday, April 7, 2015
End of 25-day quiet period: Monday, November 3, 2014
Valuation
Conclusion
Neutral, 95 P/E seems high, pays no taxes
61% to selling shareholders
Online merchants -22%, Asia active paying users -33%
Active retailers reloads +9.6%
Rev up +33%, operating profit +12%
Profit +78% but other income is 1/3 of total profit
EBITDA +25%
Business
MOLG is the largest e-payment enabler for online goods and services in Southeast Asia by payment volume, according to the Frost & Sullivan report.
MOLG operates a payments platform that facilitates online and mobile commerce for consumers in emerging and other markets by providing a vast network of payment channels that accept payment using cash and online methods.
MOLG’s physical distribution network comprises more than 970,000 physical locations in 13 countries across four continents where MOLG maintains a local presence as of June 30, 2014 and physical locations in other countries where MOLG has relationships with aggregators that distribute its products through channels with which they have relationships.
MOLG also has mobile and electronic distribution channels that accept major credit cards and online banking from more than 100 banks globally as of June 30, 2014.
MOLG’s primary product is its MOLPoints micropayment system, which sells payment credits that can be used by consumers to purchase online game credits and other digital content, including Facebook Game Cards. MOLG also operates MOLReloads, a distribution network that distributes prepaid mobile airtime and digital content; MOLPay, a payments solution for online merchants; and MMOG.asia, an online games portal.
MOLG plans to launch MOLWallet, an online and mobile payment processing and money transfer system in Malaysia in 2014.
MOLG’s products provide various opportunities to acquire and retain customers and their payment credentials, which present cross-selling opportunities for its existing and future solutions. MOLG’s user base consists of both registered and unregistered users.
MOLPoints can be used to purchase credits that can be used in thousands of online games and other digital content, from over 500 content providers as of June 30, 2014.
MOLG operates in markets that are largely cash-based and offer consumers the opportunity to purchase MOLPoints in cash through its physical distribution network, which comprises chain operators such as 7-Eleven, individual retailers such as cybercafés, and aggregators such as e-pay. MOLG’s physical distribution network for MOLPoints includes its MOLReloads distribution network in Malaysia, the Philippines and Thailand.
In addition, MOLPoints are available for purchase using credit cards, through online banking and at electronic kiosks in retail locations.
MOLG currently operates local websites for MOLPoints, or equivalent products for local markets, in 13 countries, namely Malaysia, Thailand, Turkey, the Philippines, Singapore, Indonesia, India, the United States, Australia, Brazil, Taiwan, Vietnam and New Zealand.
MOLReloads distributes electronic vouchers, or e-vouchers, for pre-paid mobile airtime and digital content including MOLPoints.
Consumers can purchase prepaid mobile airtime for most major mobile service providers in Malaysia, the Philippines and Thailand through MOLG’s MOLReloads distribution network, which comprises chain operators, including more than 1,600 7-Eleven convenience stores as of June 30, 2014, cybercafés and bookstores, and in the Philippines, individual distributors who distribute e-vouchers through mobile phones and personal computers in cybercafés.
In January 2014, MOLG entered into an agreement with InComm, a provider of pre-paid products, services and transaction technologies, pursuant to which MOLG plans to distribute point-of-sale activated, or POS-activated, pre-paid gift cards through its MOLReloads distribution network.
MOLPay is an integrated payments solution for online merchants, which offers cash, online banking and credit card payment processing options for their consumers.
MOLPay is currently offered in Malaysia and Vietnam, and MOLG expects to launch MOLPay in Indonesia in 2014.
MOLPay has an agreement with MyClear to serve as a third party (non-bank) acquirer for MyClear’s FPX and direct debt services.
In addition to online banking and credit card payment, MOLPay has agreements with various distribution partners for collecting payments at more than 23,000 additional physical cash payment points in Malaysia, Singapore and Indonesia, including at 7-Eleven and other convenience stores, cybercafés and petrol stations, which are in the process of being rolled out in 2014. MOLG owns 51% of MOLPay Sdn. Bhd., which operates MOLPay. As of June 30, 2014, consumers could use MOLPay to make purchases from 3,058 online merchants.
Intellectual property
MOLG’s patent for “VALUE EXCHANGE SYSTEM FOR USE WITHIN AN INTERNET-BASED SOCIAL NETWORK”, which is a method of enabling a value exchange system between users of a social networking service by means of registration and assignment of accounts, has been approved in the United States pursuant to the international Patent Cooperation Treaty, or PCT. MOLG’s PCT application with respect to this patent is at the examination stage in a number of other countries.
Competition
MOLPoints competes primarily with game operators who sell game credits themselves, online aggregators of digital content such as Offgamers, global micropayment providers and aggregators such as Cherry Credits, which is a subsidiary of Shanda Games International, and local micropayment providers such as Indomog in Indonesia and TrueMoney in Thailand.
MOLPoints competes primarily on the basis of its ability to attract and retain online game players and other consumers, which in turn depends on MOLPoints’ ability to attract content providers and distribution channels.
5% shareholders pre-IPO
Ganesh Kumar Bangah 11.3%
Tan Sri Dato’ Seri Vincent Tan and his entities and affiliates 69.3%
MOL.com Sdn. Bhd. 24.4%
Hotel Resort Enterprise Sdn. Bhd. 22.8%
His Royal Highness Sultan Ibrahim of the State of Johor 14.7%
MOL Ventures 12.6%
Ganesh Kumar Bangah 11.3%
Rayvin Tan Yeong Sheik 9.7%
MOL Investments Pte. Ltd. 5.1%
Dividend Policy
No dividends are planned.
Use of proceeds
MOLG intends to use the $88 million in proceeds from its IPO as follows:
$27.7 million (MYR88.8 million) million to repay
(i) an aggregate of approximately $6.5 million (MYR20.8 million) of interest-free advances from MOL Ventures, which were advanced in connection with its acquisitions of Game Sultan, PaytoGo, NganLuong, Rixty, Uniwiz and Zest; and
(ii) the remaining outstanding amount under its revolving credit facility from MDV, which was $21.2 million (MYR68.0 million) as of June 30, 2014 and which MOLG had incurred in connection with the expansion of its business in Malaysia, and incurs interest at the rate of 7.25% per annum and is due in December 2015;
(iii) $25.5 million (MYR81.9 million) in connection with its increased beneficial ownership interests in its subsidiaries, MOL Thailand, Game Sultan, PaytoGo and MyCNX, and
(iv) the balance for general corporate purposes, including funding potential acquisitions of complementary businesses and funding its ongoing working capital requirements.
