Cover Story 1: Puzzling off-then-on Philippines deal

Saturday 26 Sep 2026

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This article first appeared in The Edge Malaysia Weekly on September 14, 2026 - September 20, 2026

THE back-to-back termination and rehash of Zetrix AI Bhd’s (KL:ZETRIX) deal to increase its effective stake in its Philippines business, MyEG Philippines Inc, raises questions about the rationale for the abrupt change.

Components of the deal remain largely the same. The digital services group is acquiring a 50% stake in MyEG Ventures Inc for RM130 million in shares and cash, to increase its effective stake in MyEG Philippines to 74.5% from 49%.

The only major change is the vendor. Zetrix AI and Next Lion Ltd mutually cancelled the deal on Sept 4, just three days after it was inked, citing share price volatility. On the same day, Zetrix AI entered into a new deal with IPVG Employees Inc.

Under both deals, the maximum number of consideration shares to be issued is 360.57 million, equivalent to a 4.58% stake in Zetrix AI based on an enlarged share base.

Both deals were inked amid volatility in Zetrix AI’s share price. Just before the deal with Next Lion was announced, the digital services group had lost nearly 60% of its market value in less than a week.

Assuming the consideration shares are prioritised over cash, Zetrix AI’s recent share price level enables the vendors to secure the full allotment plus cash.

Back-of-the-envelope calculations show that an issue price of 36.05 sen serves as the threshold for receiving the full allotment of 360.57 million shares. Anything above that means fewer shares or a smaller stake, while anything below that means the full allotment of shares plus cash.

The deal with Next Lion was terminated over a dispute about the issue price, according to Zetrix AI.

Meanwhile, the group has fixed the issue price from the get-go under its deal with IPVG. The 360.57 million shares will be issued at 28 sen apiece to cover RM100.96 million of the purchase consideration, while the remaining RM29.04 million will be paid in cash.

What exactly was in dispute between Zetrix AI and Next Lion over the issue price was not disclosed. The group has declined to respond to The Edge’s queries.

Zetrix AI expects to complete the acquisition of the 50% stake in MyEG Ventures from IPVG by the end of this month.

On paper, both deals pursue the same objective for Zetrix AI — to increase the group’s stake in MyEG Philippines and support its expansion in the Philippines.

Having said that, Bursa Securities queried Zetrix AI about the deal, as well as the one with Next Lion that was terminated, particularly about the basis for determining the RM130 million purchase consideration. The bourse regulator highlighted that MyEG Philippines had an average profit after tax (PAT) of PHP21.61 million (RM1.4 million) in its past three financial years and net assets of RM20 million as at end-December 2025.

In response, Zetrix AI said the deal should be assessed from a longer-term perspective, citing MyEG Philippines’ future growth prospects, with “several projects involving delivering digital and technology-enabled services” to the Philippines government in the works.

One such potential project involves the use of the Zetrix Layer-1 public blockchain platform as the underlying protocol for the Philippines’ public blockchain infrastructure. A memorandum of understanding for the project was inked in July between Zetrix Philippines Inc, the Philippines’ Department of Information and Communications Technology, and My Blockchain Infrastructure Sdn Bhd, a joint venture (JV) between Zetrix AI and Mimos Bhd.

The Zetrix Layer-1 public blockchain platform is already used as the core chain for the Malaysia Blockchain Infrastructure.

Valuation aside, the switch in vendor also throws up an interesting ownership wrinkle, given MyEG Philippines’ projects with the Philippines government and its existing provision of e-government services in the country.

Zetrix AI’s prospective buyout of IPVG’s stake in MyEG Ventures would leave the group and Next Lion, both Malaysian-linked entities, as the only two shareholders of the vehicle and, in turn, MyEG Philippines.

IPVG is 99.99% owned by Filipino businessman and entrepreneur Jamie Enrique Y Gonzalez, while Next Lion is owned by Malaysian fund manager Sean Yap Shon Leong.

Next Lion will therefore continue to have a stake in Zetrix AI’s Philippines operations. The firm curiously also features elsewhere in the digital group’s expansion plans (see accompanying story).

The role of Next Lion in Zetrix AI’s Nasdaq listing

Despite the terminated deal with Next Lion Ltd on the Philippines venture, Zetrix AI Bhd’s (KL:ZETRIX) ties with the former remain firmly on their interest on the other side of the world — a special purpose acquisition company (SPAC) listed on the Nasdaq in the US.

Incorporated in the British Virgin Islands, Next Lion is the managing member of Next Lion Sponsor Holdings LLC, the sponsor of Nasdaq-listed SPAC Forefront Tech Holdings Acquisition Corp (FTHAC). Next Lion is owned by Malaysian fund manager Sean Yap Shon Leong, who is managing director of M&A Asset Management Malaysia Sdn Bhd.

The SPAC, which raised US$100 million from its initial public offering (IPO) on May 1, entered into a memorandum of understanding (MoU) with Zetrix AI on May 25 for a potential business combination.

FTHAC is eyeing a potential business combination in the technology sector, “with emphasis on blockchain-enabled artificial intelligence (AI), digital trade identities and robotics”, according to its prospectus sighted by The Edge.

Zetrix AI, together with government-to-government initiative China-Asean AI Lab, meanwhile, has been focused on the development of technology that converges blockchain, AI and robotics solutions. The group said it was exploring carving out projects from the China-Asean AI Lab into a new subsidiary intended for listing on an exchange overseas such as the Nasdaq.

Zetrix AI co-founder and managing director Wong Thean Soon, or better known as T S Wong, previously indicated that the listing was targeted for this year.

The carving out of projects, dubbed AI Foundation Lab, is targeting a valuation of US$3 billion (RM12.2 billion), alongside a US$200 million capital-raising exercise before the listing, according to an Aug 26 CLSA note. It plans to eventually pare down its stake in the US-listed company, with proceeds to be used to reduce its debt, and potentially pay a special dividend.

Zetrix AI has been piling on debt since 2022, following its refocus in blockchain and AI-related services. Its gross debt stood at RM166.1 million in the financial year ended Dec 31, 2021 (FY2021), which rose to RM483.3 million in FY2022 and steadily increased to RM2.2 billion at end-June 2026.

Rising debt is attributed to Zetrix AI’s spending on the development of its blockchain platform, applications and associated agentic AI. Its development cost of RM171.3 million in FY2020 was noticeable. At end-June 2026, it stood at RM3.7 billion.

The increase in development cost has also outpaced the rate at which the assets are being amortised. The company’s development cost has grown at an average of RM720.17 million a year over the past three financial years, while an average of RM28.51 million was amortised each year.

The development cost has already been highlighted as a “key audit matter” by Zetrix AI’s external auditors, signifying the rising concern.

In FY2025, management already noted that increased competitor activity had caused the board of directors to “reconsider their assumptions on future market share and anticipated margins” of its Zetrix Layer-1 public blockchain platform. Nonetheless, the board said it remained confident of recovering the assets’ development cost, even if the returns were reduced.

The MoU with FTHAC, meanwhile, does not guarantee a transaction or specifically commit parties to a Nasdaq listing. The MoU is non-binding and carries an exclusivity period until Nov 21, unless mutually extended.

FTHAC has until Nov 1, 2027, subject to shareholder-approved extensions, to complete its initial business combination. If it fails to do so, the SPAC will be liquidated and the public shares redeemed.

Still, Next Lion’s position behind the sponsor of FTHAC makes the connection notable.

Next Lion Sponsor Holdings, together with Next Lion, were each disclosed as beneficial owners of the 3.69 million FTHAC shares, or 26.9% of the SPAC’s voting shares. It has already forked out close to US$3.6 million to subscribe for the shares in the SPAC.

The sponsor has significant influence over FTHAC before its initial business combination, including control over the appointment of the SPAC’s directors. Three of its five directors, however, are independent under the Nasdaq’s listing rules.

A proposed business combination requires a simple majority vote of shareholders, with a quorum of at least one-third of the voting shares. As such, the sponsor’s voting shares alone would be sufficient to approve a business combination, according to FTHAC’s prospectus.

This gives Next Lion an influential position in deciding the course of FTHAC’s initial business combination. But whether Zetrix AI’s plans to list its blockchain and AI-related unit via the Nasdaq-listed SPAC comes to fruition remains to be seen.

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