Exabytes’ regional ambitions gets US$10.7mil boost from Malaysian PE firm, Ekuinas
By Karamjit Singh March 19, 2019
- Exabytes seen as ticket to capitalise on booming internet economy globally
- Growth in Indonesia a key focus, in talks for its first acquisition there
IT IS your classic story of talented geek who dropped out of college because the company he started from his bedroom was earning him more money that he would have made as a fresh programmer in Penang. At 19, that helped allay his parents’ fear that their son was losing his mind from all the late nights he was up, not studying but working on making customised PCs for clients.
He earned his first million within two years of setting up his web hosting and cloud services business and has gradually built Exabytes Capital Group, through organic growth and six acquisitions in Malaysia and Singapore into becoming a regional company with a presence in Singapore and Indonesia while successfully carving out an estimated 30% market share of the Malaysian web hosting and cloud services market.
This steady and gradual growth caught the attention of Malaysian private equity group, Ekuiti Nasional Bhd (Ekuinas) which announced on March 18 that it had acquired an initial 40% stake in the 190-person strong Exabytes Capital Group for US$10.7 million (RM44 million), with an option to raise its stake up to 54% based on an already agreed upon valuation, says founder and chief executive officer Chan Kee Siak.
Either party can trigger the option with Chan explaining that Exabytes could do so if it needed more capital for expansion. He declines to reveal how much of the RM44 million is going into the business and what percentage will be a cash out by him.
Suffice to say that the amount retained for the business is enough for it to accelerate its growth, both organically and via acquisitions, with Exabytes currently in talks with an Indonesian company to acquire it. The acquisition, should it go through, will be the seventh Chan has made in the past two years but first in Indonesia.
Ekuinas CEO Syed Yasir Arafat Syed Abd Kadir is excited about the future. “Exabytes is a prime example of a company that can be a regional leader and position Malaysia as a hub for business and talent. Through Exabytes, Ekuinas will be able to capitalise on the booming internet economy globally,” he said in a statement.
Established by the Malaysian government in Sept 2009, Ekuinas was formed to promote equitable and sustainable Bumiputera economic participation via the creation of Malaysia’s next generation of leading companies. Exabytes fits the bill for Ekuinas, which, according to its mandate, is investing and nurturing high-potential Malaysian companies that are ready to scale and compete regionally, if not globally.
The acquisition by Ekuinas marks a rare occasion when Corporate Malaysia makes a bet on a technology company with tech ecosystem watchers lamenting the lack of deals by Corporate Malaysia in the tech world as one symptom of a startup ecosystem that cannot kick into overdrive.
The catalyst for the deal was the Malaysian Digital Economy Corporation (MDEC), through its Global Acceleration and Innovation Network (GAIN) team which introduced the two parties. Just under a year later, the acquisition was made with Chan (pic, right) sharing that the valuation was agreed upon quite easily by both parties.
The immediate priority is to grow in the Indonesian market, says Chan though there will be equal focus in Malaysia as well with a lot of upside in the market. “We plan to introduce more digital services to help SMEs grow with cloud services, office productivity tools and online security services offered.”
The plan is to focus on more verticals and to also enter the enterprise market. “We also plan to look at other markets in Southeast Asia.” It looks like it will be a busy few years for Chan.