Gamboa Holdings and Amalgated Investment Bancorporation, (AIB) the majority owner of Cashrounds, have signed a memorandum of agreement for the sale of 18.17 million shares of Cashrounds, representing a 66.67-percent stake, for P74.4 million.
The sale will be done in two tranches this year. The first will be on or before May 9 for 9.085 million shares and the balance on or before July 23, 2005 or upon release of the second batch of one-third shares held in escrow pursuant to the lock-up provisions under the Philippines Stock Exchange (PSE) rules.
The agreement was signed for Amalgated by its chairman Juan Carlos del Rosario and for Gamboa Holdings by its chairman Mel Velarde.
Gamboa Holdings said it intends to expand Cashrounds' business by building on its existing information technology platform in order to introduce related products and services such as cash remittance, point of sale, among others, and integrating wireless communication technologies. Gamboa Holdings is a subsidiary of The Velarde Group Inc.
Cashrounds is the first online broker of private equity for small and medium-scale enterprises (SMEs) in the country. "The computer is now being used to transact private equity. Going forward, this will be instrumental in borderless brokerage that will enable us to do non-Philippine equities," Del Rosario earlier said.
"The use of IT (information technology) platform is something that’s timely considering that the dotcom industry had gone through the cycle of boom and bust. In the US, most of the branded type of dotcoms are now making money," AIB president Rene Benitez added.
Cashrounds contributed only a small portion of AIB’s revenues but its business model has a lot of potential, considering that 80 percent of enterprises in the Philippines are in the SME category. Its website, Cashrounds.com, offers matchmaking services for investors and fund seekers. It also teaches SMEs on how to draw up business plans.
Cashrounds is in the business of matchmaking between companies that have funding requirements and individuals or institutions who have funds to invest. It operates as the on-line agent for companies that look for equity financing outside the stock market and thus serves as the private placement platform. After gathering and screening the company’s investment proposals, Cashrounds refers them directly to the fund providers such as venture capital funds, investment houses and high net-worth individuals.
AIB, on the other hand, is a local investment bank engaged in providing knowledge-based corporate finance and money markets services for its corporate and private clients.
Earlier, PEP disclosed that an earlier agreement for its acquisition of a controlling interest in Next Mobile and the latter’s purchase of majority of PEP has already expired without both parties extending the deals effectivity.
Sources said that Next Mobile did not sign a new agreement with PEP with the original MOA expired in October last year because the market was not performing well. When the market subsequently improved, Next Mobile was already in talks with other parties.
Next mobile wanted to acquire PEP not only to expand its business but reportedly to use the latter as a vehicle for backdoor listing and raising funds for its expansion program.