KUALA LUMPUR (Nov 28): Catcha Digital Bhd (KL:CATCHA) is to purchase a 51% stake in software-as-a-service (SaaS) provider Nexible Solutions Sdn Bhd for RM11.38 million, cash.

The digital media and advertising company’s wholly-owned unit Catcha Nexible Holdings Sdn Bhd has inked an agreement to purchase the 51% stake — 51,001 shares — in Nexible with the company’s shareholders Ananprakash Saminathen and Alagess Deraraj, according to Catcha’s bourse filing on Thursday.

Nexible is 85%-owned by Ananprakash and 15% by Alagess. The 51% stake in Nexible that Catcha is purchasing comprises 35.7% from Ananprakash and 15.3% from Alagess. The filing did not disclose further information pertaining to Ananprakash and Alagess.

Catcha noted the RM11.38 million purchase consideration is tied to profit guarantees agreed with the vendors.

The consideration is to be paid in annual tranches tied to specific profit targets. In the event a respective profit target is not met for a particular year, the tranche to be paid for that year shall be adjusted.

The profit guarantees comprise net profit targets of RM700,000 for the financial year ending April 30, 2024 (FY2024), RM1.2 million for FY2025, RM2.2 million for FY2026 and RM3.3 million for FY2027.

For the financial year ended April 30, 2023 (FY2023), Nexible posted a net profit of RM157,083 versus a net loss of RM375,540 in FY2022 and a net profit of RM134,712 in FY2021. Revenue stood at RM942,543 in FY2023, RM557,555 in FY2022 and RM362,977 in FY2021.

The consideration is to be funded via internally generated funding, but notes borrowings or a fundraising exercise may be considered by Catcha. Its cash balance stood at RM8.42 million as of Nov 26.

Catcha views the Nexible stake acquisition as an opportunity to expand into the IT sector and provide cross-selling opportunities for Catcha’s existing advertising solution to Nexible’s client base and vice-versa. 

The acquisition is expected to be completed by the first quarter of 2025.

Shares in Catcha ended 1.5 sen or 4.41% higher at 35.5 sen, valuing the company at RM128.29 million.