Moni Plus is preparing to list on the Singapore Stock Exchange (SGX)—a first for a Papua New Guinea financial institution. Managing Director David Kelso tells Business Advantage PNG that the company intends to expand its shareholder base and move into new markets.

Moni Plus has announced it will undertake a reverse takeover (RTO) of the Singapore Stock Exchange-listed ‘cash box’ company, Jaya Holdings.

‘Moni Plus has been very successful; it has really grown over the last five years,’ Kelso tells Business Advantage PNG. ‘We have got ourselves to a point where we are probably the most successful finance company in the country.’

Moni Plus’ David Kelso

‘We felt it was appropriate that we institutionalize our shareholding. At present, it is owned by individuals. We need to broaden our shareholder base, institutionalize it properly and structure it for our future growth.’

Kelso says Jaya Holdings has S$17.5 million (K40 million) in cash. But it has no business operations, so it was close to being delisted.

According to a statement from both companies, 725 million new shares will be issued. This values Moni Plus at S$232 million (K531 million), more than ten times the market capitalization of Jaya.

Profitable

Mini Plus has sharply increased its profitability in the last three years, according to the statement. Profits almost doubled from S$11.4 million (K26.1 million) in the 2013 financial year to S$19.4 million (K44.1 million) in the 2015 financial year.

‘We have grown through consistent quality customer service.’

‘The key is our focus on customer service, superior operating system and expansive MIS (management information system),’ says Kelso, explaining the reason for the remarkable growth. ‘We have got a processing system where we can do up to 400 loan applications in a very busy day. All those applications are processed, approved and settled.

‘Everyone offers 24-hour [loan] approval, but that doesn’t mean a thing unless you get 24-hour settlement. We do that, and we do it proudly. We have grown through consistent quality customer service.’

Options

Kelso says he and his directors looked at different options for going public, including the Port Moresby Stock Exchange (POMSoX) and the Australian Stock Exchange (ASX). But he says Singapore is the best option.

‘The PNG exchange was simply lacking liquidity; there are far more sellers than buyers,’ he says. ‘The very same institutions we would want to become shareholders of us are already deeply engaged in Bank South Pacific (BSP) and BSP Finance, Credit Corporation and now, more recently, Kina Bank.

‘The key with Singapore is that we are in a place where we can go to emerging markets.’

‘I would be talking to the very same people who are shareholders of all those other licensed institutions that have decided to list on POMSOX.

‘So, I took the initiative of looking north, looking at Singapore. I liked the high level of governance and the strict obligation to compliance. Being listed on the SGX carries a very high level of credibility.

‘Singapore also provided a very good base for our future growth. We see our model being quite successful in other emerging Asian markets. So we thought we would give it a crack.’

Selling PNG

Reverse takeovers are unusual in PNG—one reason why a confused local media has reported the transaction as Jaya Holdings buying Moni Plus.

Kelso says the reverse takeover option was chosen to make the Singapore market more familiar with Papua New Guinea. He says Moni Plus is easily analysed, but Papua New Guinea is unfamiliar territory. Therefore the challenge is not only selling Moni Plus; it is also selling PNG. ‘They don’t know who we are, or where we are, or what we are.’

‘The company we identified, Jaya, is a cash company and a clean skin. They were coming close to delisting. They had a couple of companies circling around that didn’t pass the fit and proper test. We did various presentations, displayed our credentials to the market and they liked us.’

New shareholding arrangements

Sir Brown Bai

Kelso says Jaya shareholders will be diluted to approximately 7 per cent of the new entity as a result of the takeover. Issuance of additional shares to institutional shareholders will leave the existing shareholders of Moni Plus holding about 73 per cent of the new company’s stock. The new entity will trade under the name Moni Plus Holdings.

‘Our advisors are talking to some 60 to 70 institutions and fund managers which will significantly broaden and strengthen our shareholder base and provide more capital.’

It is proposed that the chairman of the listed company will be Sir Brown Bai and there will be two independent Singaporean directors.

‘It is pretty cosmopolitan on that Singaporean bourse. Companies are from all over the world are listed and operate throughout Asia. We will be doing roadshows to analysts and fund managers. We will go up to Hong Kong and Malaysia as well.’

Emerging Asian markets

Kelso says he has identified a niche in Singapore for the company’s on-line foreign exchange product. But the focus will mainly be on emerging Asian markets.

‘The key with Singapore is that we are in a place where we can go to emerging markets—Myanmar, Laos, Cambodia—which have similar demographics to PNG. I can use our model there to operate.

‘In each of those precincts, our personal loan product may not be as successful as it is in PNG. However, the asset finance might work well, or there may be opportunities for our online FOREX business in those regions.’

Kelso added there would be no change to the management and board of the PNG business as a result of the listing.