Its strong presence and connections in Africa is one of the main reasons the FELDA is willing to pay a high premiums to acquire a 20% stake in IRIS.
FGVH has been looking to expand into Africa for some time now (Aug 2013). For instance it has been planning to create a palm oil hub with storage facilities in West Africa for over a year now (Aug 2013).
IRIS, which provides trusted ID solutions to at least four countries in Africa could help FELDA make inroads into the continent.
Its MD DAtuk Tan confirms that the African link played a key part in FEDLA’s valuation of the company.
There are also other reasons FELDA bought into IRIS such as IBS, renewable energy and food security.
IRIS has diversified from its traditional core business of trusted ID. This division, which houses the electronic passport business accounted for about 70% of its revenue in FY2013 ended March 31.
These days, IRIS has five other distinct divisions – business (under which it houses its automated fare collection and auto gate businesses), food security (which houses its autopot technology, environment, IBS and sustainable development. Its participation in IBS is through its 51% equity interest in IRIS Kota Sdn Bhd.
It expects its revenue from the sustainable development and IBS divisions to surpass that from the trusted ID division within the next 12 to 18 months from Aug 2013.
To recap FELDA bought 394 million new IRIS share, under a private placement exercise.
IRIS has now (Aug 2013) fresh capital of rm111 million in its coffers. As at March 31 2013, the company’s cash reserve amounted rm59 million compared with total borrowings of rm267 million including short term loans of rm168 million.
Following the deal, FEDLA will be the single largest shareholder in IRISI while Tan will have a combined direct and indirect interest of about 9%.
Its fixed assets were worth of rm505 million consist of three major items namely concession on assets of rm186 million, goodwill on consolidation of rm142 million and property, plant and equipment of rm162 million.
Earnings from the LBS and sustainable development divisions will eventually be boosted by the RK and SK projects that it undertakes for the government and FELDA respectively. Each RK contract is worth about rm24 million while the SK contract is worth rm40 million.
IRIS is also poised to benefit from the government’s plans to provide affordable housing in Malaysia, given that it will involve the use of IBS.
The RK and SK Projects are essentially sustainable development projects, where IRIS uses its IBS and autopot technologies to provide fast, affordable bousing and employment.
RK is about moving people who live in object proverty to proper housing and providing employment. FELDA’s SK Project is similar to the RK’s projects.
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