CEO: Catcha Media won’t be taken private — for now

PETALING JAYA: Catcha Media Bhd
would not be taken private for the time being, although major
shareholders might do so if its shares remained flat till the end of
the year, said chief executive officer Patrick Grove.
The integrated media outfit's founder told StarBizWeek that
several private equity funds had approached him about the possibility
of buying out the company. However, the long-time entrepreneur told
them that he would prefer to keep it listed.
Though he did not
name the parties, Grove said two funds, one local and the other a
US-based firm regionally headquartered in Singapore, had expressed
interest in taking Catcha Media, which debuted on the ACE Market in
2011 at 75 sen a share, off the market. Grove was responding to a
research report by CIMB Research issued yesterday that suggested Catcha Media could be privatised by private equity funds.
“We
gather from a recent visit that management may consider this option if
Catcha Media's share price remains depressed. In our view, any buyout
price is likely to be above the 75 sen initial public offering (IPO)
price, as this would alleviate the pain of long-suffering shareholders.
“Management
is also seeking to sell equity in Catcha Media's subsidiaries, which
would establish their valuations,” the brokerage said.
CIMB
Research opined that Catcha Media was “deeply undervalued”, as its
current share price stood at a 51% discount to the research house's
target of 96 sen.
“At Catcha Media's current price, its market
valuation is approaching irrational levels, as this is 15% below its
holdings in iCar Asia. This means investors are getting the advertising
and e-commerce businesses for free,” CIMB Research wrote.
Australia-listed iCar Asia is 30%-owned by Catcha Media and Asean's top online auto classified portal.
Grove
echoed these sentiments. “We aren't considering a privatisation right
now, but we might think about it seriously if our shares continue to
trade at these levels.”
Together with his partners, 39-year-old
Grove has 58.5% control of Catcha Media. Other notable shareholders who
had invested at the point of the IPO include Genting Group scion Datuk Justin Leong with a 5% stake and Star Publications (M) Bhd with 4.9%.
Catcha Media has slumped 15% since listing, although it hit a peak of 90 sen in mid-2011.
CIMB
Research attributes the underperformance to the myriad media platforms
owned by Catcha Media and “Malaysian investors' failure to understand
high-growth Internet models”, given the lack of such listings on the
local bourse.
Catcha Media also announced on Tuesday a RM60mil
merger between its digital and publishing business and social media
marketing website Says.com, creating one of the country's largest
digital advertising groups by reach, clients, spend and profitability.
Catcha Media will own 70% of the new company and Says Sdn Bhd the balance 30%, implying a RM42mil value for the former's stake. Says.com serves over 80 leading brands, including Nike, Coca-Cola, Unilever, Maxis and Nestle.
“The
merged entity aims to be a major player in Malaysia's online
advertising space by combining Catcha Media's established advertising
base with Says.com's social media expertise.
“The new entity is
not expected to require external funding, as existing operations are
already profitable. Both teams at Catcha Media and Says.com intend to
expand this business regionally, and the expected profitability of the
merged entity should pave the way for an IPO in the next 12 months.
“The
merger is positive for Catcha Media, as it enables the company to tap
Says.com's social media expertise. This is critical for Catcha Media,
as consumer trends show social media marketing is a fast-growing media
category and advertisers are increasingly turning to social media to
reach consumers,” CIMB Research explained, adding that Catcha Media
could be another Jobstreet in the making.
The firm's shares rallied three sen to close higher at 63.5 sen yesterday, with 2.4 million shares being done.