KUALA LUMPUR (July 14): AEON Credit Service (M) Bhd said the group and Tokyo-listed AEON Financial Service Co Ltd (AFS) will have equal ownership in their joint venture company that will undertake digital Islamic banking operations in Malaysia, with an investment of RM175 million each.
The group said it has entered into a shareholders’ agreement with AFS to undertake the digital Islamic banking business through ACS Digital Bhd (ACSD), which is preparing to be licensed as a digital Islamic bank.
Subsequent to ACSD commencing its business, AEON Credit and AFS may raise additional share capital of up to RM200 million, raising the total share capital to up to RM550 million, said AEON Credit in a bourse filing on Friday (July 14).
The group said ACSD will commence the digital Islamic banking business by April 8, 2024.
Notwithstanding the 50%-50% shareholding structure, AFS’ effective equity interest in ACSD will be 80.75%, considering that the Japanese company has a 61.50% interest in AEON Credit.
Meanwhile, AEON Credit said the group and AFS will ensure that ACSD complies with the condition imposed by the Ministry of Finance for at least 30% of the shares in the joint venture company to be held by Malaysian shareholders, with priority given to Bumiputera shareholders, within five years from the commencement of the business.
"Upon compliance with the equity condition, the eventual equity structure in ACSD would be AEON Credit (35%), AFS (35%) and the Malaysian shareholders (30%), and that the equity interest of the respective parties shall only be finalised at that point in time of compliance with the equity condition," said AEON Credit.
The group said the joint venture represents a timely opportunity for AEON Credit to reach a wider pool of customers through ACSD.
"The parties shall deploy their combined expertise in providing financial services and solutions to customers, especially from the underserved and unserved market segments, adding dynamism to the banking landscape and contributing to the financial inclusion agenda in Malaysia," it added.
AEON Credit managing director Daisuke Maeda said: “The integration of our digital Islamic banking business onto the AEON Living Zone will enable us to meet customer lifecycle needs and expand our membership base for cross-selling activities which will drive transaction volume and market share for all our businesses.”
Maeda added that aligning with Sustainable Development Goal 10, digital banks would be better positioned than traditional channels in serving financially underserved segments like gig economy workers or rural residents who may lack credit history to have equal opportunities to receive loans or gain access to a wider variety of financial services.
AEON Credit also announced on Friday a proposed bonus issue of 255.31 million new shares on the basis of one bonus share for every one share held on an entitlement date to be announced later.
AEON Credit said that the proposed bonus issue will not increase the value of its total issued share capital, which stands at RM584.01 million.
“The proposed bonus issue is to reward the existing shareholders of AEON Credit for their continued support by allowing them to participate more in the equity of the company in terms of the number of AEON Credit shares held with no cash outlay by them, whilst maintaining their percentage equity interest in the company,” said Maeda.
He added that the bonus issue would also improve the marketability of AEON Credit’s shares on the Main Market of Bursa Securities, thus, increasing liquidity at a lower trading price and greater participation.
Shares of AEON Credit closed 10 sen or 0.89% higher at RM11.34, giving the group a market capitalisation of RM2.9 billion.