KUALA LUMPUR (July 29): CTOS Digital Bhd made its first post-listing acquisition by buying a 4.63% stake in credit rating agency RAM Holdings Bhd from CIMB Bank Bhd for RM10.05 million, to extend product offering to its existing customers.

In a bourse filing, CTOS said the group had today entered into a share purchase agreement (SPA) with CIMB Bank to acquire 462,500 ordinary shares in RAM.

It said the acquisition of a strategic minority stake in RAM will allow both companies to leverage each company’s expertise in credit assessment, data and analytics to further extend their product offering and value proposition to their existing customer base.

“Both companies are expected to benefit from the partnership from the potential synergies in both product offerings and customer base,” it said.

The purchase consideration was arrived at based on a willing buyer willing seller basis after taking into consideration that it represents 1.3 times of FY2020 net asset value of RAM and 25.9 times of FY2020 profit after tax, in line with other listed credit rating agencies globally.

The purchase consideration for the proposed acquisition will be wholly satisfied by the cash proceeds raised for new acquisitions from the recent initial public offering exercise.

CTOS Digital chief executive officer Dennis Martin said RAM is the market leader in Malaysia's bond rating industry, and they also offer a range of solutions, spanning economic and debt market research, data and analytics, and sustainability services.

“We believe there are strong synergies in both product offerings and customer base between both companies which we will look to realize on moving forward,” he said.

The acquisition is not subject to approvals of CTOS Digital’s shareholders or other relevant regulatory authorities. The exercise is expected to be completed on the same day as the SPA.

RAM is a provider of independent credit ratings, research, training, risk analysis, environmental, social and governance (ESG) analytics and bond pricing and valuation data.

In FY2020, it generated a revenue of RM40 million and profit after tax of RM8.4 million.

At noon break, CTOS Digital was unchanged at RM1.56, valuing the group at RM3.39 billion.