RCI banks on South-East Asia to fuel expansion
By Edwin Yapp August 20, 2013
- Rapid Cloud International founder rises from humble beginnings to list company on London’ AIM exchange
- Re-branding in the offing as company becomes more software-based; targets SMBs in SEA for growth
IT’S not every day that a Malaysian IT company gets publicly listed on a local bourse, let alone a foreign one. So when news broke last week that that software developer and cloud provider Rapid Cloud International Plc (RCI) had made a positive debut on London’s AIM (Alternative Investment Market), it was significant for Malaysia’s entrepreneur ecosystem.
The positive share price listing on its debut day (Aug 14) was a big relief to RCI’s majority shareowner and managing director Raymond Chee, something that was evident the day after when Digital News Asia (DNA) met up with him.
Dressed in smart casual attire and looking very relaxed at the interview in Kota Damansara, Chee says, “I’m pleased with the performance of the shares on the first day of trading [when it went up 29%]. I’m just glad that we managed to make it this far and things are looking positive.”
But if you’d asked Chee how he felt a year ago, he would have said 'pretty stressed' and up to his eyeballs in work, as the listing exercise had been a long and arduous one. Beginning with the initial public offering (IPO) process back in June 2011, the entire move took more than two years to put together.
“We pursued a number of options for our listing – Hong Kong’s GEM (Growth Enterprise Market), the Australian Securities Exchange (ASX ), London’s AIM and, of course, Malaysia’s ACE too,” he says. “But in the end, we decided to go with London’s AIM as things didn’t materialise in the other markets.”
The affable 37-year-old entrepreneur, who hails from Malaysia’s east coast city of Kuantan, Pahang, says RCI's management finally chose London’s AIM in line with its plan to raise money for its regional expansion plans.
“London is the recognised financial centre of the world and we believe that any global player should be able to raise money there,” Chee (pic) says. “Another important reason was the fact that it’s much more affordable now for companies to be listed on the AIM compared with a few years ago.”
He says that companies trying to list themselves on the AIM some five years ago would have had to pay up to RM5 million, including legal and accounting fees.
But because of competition from other bourses around the world, these fees have been reduced to between RM2.5 million and RM3 million, he says, adding that this is what made it attractive for RCI to be listed on the AIM market.
[RM1 = US$0.31]
Groundwork for the listing began last year, which culminated in investment roadshows with prospective investors this year. Finally, on Aug 14, RCI was listed and had a good showing on its first trading day, climbing to £0.69 or 29% higher than its offer price of £0.54. At of press time (Aug 20), its share price closed at £0.89.
For its financial year ending 2012, RCI recorded an EBITDA (earnings before income, taxation, depreciation and amortisation) of RM4.3 million on the back of RM9.4 million in revenue.
It also recorded a compound annual growth rate (CAGR) of 25% between 2010 and 2012, while its income as a percentage of sales grew from 5% in 2010 to 39% in 2012, according to company filings.
[RM1 = £0.2]
Starting out in a garage
RCI had its humble beginnings in 1999, when Chee was just a post-graduate student at Universiti Putra Malaysia, reading his Masters in Science in Computing and Communication Engineering.
“It was the beginning of the dotcom boom, and I decided to get into the web-hosting business from my rented home ‘garage,’ and that’s when I started a sole proprietorship called Emerge Technology,” he recalls.
Chee, who at that time had just completed his Bachelor of Science in Applied Physics at the Universiti Kebangsaan Malaysia, wanted very much to run his own business and began by offering web-hosting, web solutions and web design services to small and medium corporate customers.
Realising that the Internet gives parity to those wanting to do their own business, and armed with nothing but the willingness to learn, hard work and a determination to succeed, and a paltry sum of RM2,700, Chee literally went door-to-door trying to convince businesses to take up his hosting services.
“I remember printing pamphlets about my services and going from one business to another trying to convince them to sign up with me. There were some who were nice, while others treated me nastily. It was a humbling experience but I learnt a lot about how to become streetwise in my dealings with people.”
Still, Chee persevered and finally landed his first deal, a computer retailer based in Kajang, a town about 30 kilometers from Kuala Lumpur. Finding it tough going attending classes and doing sales by day while working on web designs by night, Chee inevitably dropped out of his Masters programme.
“I had to choose between the two, and I chose to continue my business as it was my passion,” he says.
He later converted Emerge Technology from a sole proprietorship to private limited company Emerge Systems (M) Sdn Bhd. Since then, he also formed other subsidiaries: Emerge Systems (M) Sdn Bhd, Emerge Software Solutions (M) Sdn Bhd, Sharksurf Philippines Inc and Emerge Systems (Thailand) Ltd.
RCI is now the group holding company for these four business entities.
Today, Chee says RCI boasts of a staff force of 100 people, including an in-house research & development (R&D) department of 30 programmers, and about another 40 who are engaged in sales and marketing.
RCI also claims to have over 36,500 customers, of which 90% are in the small- and medium business (SMB) segment, and 10% in the large enterprise and government sector.
Next: Post-IPO strategies