This article first appeared in The Edge Malaysia Weekly on October 21, 2024 - October 27, 2024

Last week, Aizo Group Bhd (KL:AIZO) announced that it had inked a memorandum of understanding (MoU) with privately held NetRunner Sdn Bhd to jointly establish a Tier-4 data centre hub in Sarawak to meet the increasing demand for secure and reliable data storage and processing facilities. The MoU is valid for two years from the date of signing, with the possibility of extensions if deemed necessary.

Aizo’s (formerly known as Minetech Resources Bhd) executive chairman Datuk Abang Abdillah Izzarim Abang Abdul Rahman Zohari was quoted as saying the MoU is a significant milestone for all parties involved. It is noteworthy that Abang Abdillah is the son of Sarawak Premier Tan Sri Abang Johari Tun Openg.

Aizo’s core business is in mining, civil works and infrastructure projects, which means that while it may have expertise in construction-related work, the data centre business is still a new venture.

Also, Ahmad Rahizal Ahmad Rasidi and Emma Yazmeen Yip Mohd Jeffrey Yip, both executive directors of Aizo, are also directors and shareholders of NetRunner, controlling 20% of the company.

Aizo has suffered losses in the last four of its five financial years and had accumulated losses of RM29.4 million at end-June this year. As at end-June, it had RM7.15 million in fixed deposits with licensed banks as well as cash and bank balances of RM10.7 million. Its short-term borrowings and long-term debts stood at RM30.02 million and RM15.79 million respectively.

The company had a cash flow deficit of RM4.48 million for the three months ended June.

A search on the Companies Commission of Malaysia’s website reveals that NetRunner has a paid-up capital of only RM100 and was registered in March this year.

Data centres have been a buzzword for the past several months, but will this particular data centre plan take off? Aizo should disclose how the hub will be funded and who its potential customers might be, among other things.

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