iVantage bares expansion plans

Awash with cash following the sale of its majority stake in International Exchange Bank (iBank), publicly listed holding company iVantage Corp. has identified several possible areas of expansion that will see the firm focusing less on information technology and more on the financial services business to become a financial conglomerate.

iVantage divested its minority shareholdings from IT businesses such as Nexus, Wordtext, and Infotouch then used the cash proceeds to increase iVantage’s stake in iBank. Just recently, Union Bank acquired iBank, including iVantage’s entire stake, the latter valued at around P3 billion.

With the sale of its stake in iBank, iVantage’s portfolio currently includes ownership of online portal Yehey.com as well as eBusiness Services Inc. which is the exclusive franchisee in the Philippines of international remittance giant Western Union.

Newly appointed company president Edmundo Bunyi told The STAR that there are plans to reacquire Philequity Fund, the country’s leading mutual fund. Philequity used to be owned by iVantage but was bought by the latter’s owners which include Ignacio Gimenez and Wilson Sy in their personal capacity. "At some point, probably next year, Philequity will find itself forming part of iVantage again," Bunyi said. Philequity is looking at expanding its array of services other than managing an equity fund.

Bunyi, formerly iBank treasurer, said his task is to invest the P3 billion proceeds from the sale of iVantage’s stake in iBank largely in fixed income securities, and probably a third in equities.

"We do not want to immediately invest the money in private equity but prefer to manage it like a fund, unless there is a compelling opportunity to acquire a stake or form another company. But there are parallel efforts to look at opportunities for stakes in other companies such as those in financial services, but no longer in IT," he revealed.

Bunyi said they see more promise in financial services, unlike IT which has a more pronounced boom and bust cycle. Other possible investments in the financial services business include going into the securities brokerage business as well as putting up an investment house, he added.

The iVantage chief executive sees Yehey, eBusiness, as well as Philequity complementing each other’s business. For instance, he pointed out that Philequity and eBusiness can use Yehey which is an online medium as an alternative channel to offer their services. Citiseconline, he noted, is one successful example of financial services being offered online.

Bunyi expects the investment industry in the country to be growing more and more as Filipinos look for alternatives to just putting their money in the bank or investing in real estate.

iVantage ended 2005 with revenues of P448 million and a net income of P219 million, but expects a large gain this year from the sale of its stake in iBank. As of June 2006, it posted revenues of P1.85 billion and a net income of P1.68 billion, compared to P241 million and P140 million respectively for the comparative period last year.

The growth in revenues was attributed to the sale of investment and the increase in number of branches of Western Union which brought about increases in money transfer service and foreign exchange gains.

Earlier, iVantage chairman and CEO Ignacio Gimenez said the simplified focus of its business is expected to continue this year, even as the company has recommitted, through the cash infusion of around P28 million, to strengthen Yehey as the primary Filipino portal for both online ads and e-commerce payment transactions.

As for the sale of its stake in iBank, Gimenez noted that this was a very good opportunity because it allowed them to realize now the value that they hope to achieve in the future. "With the sizeable proceeds from the said sale, we now have the flexibility to take advantage of any acquisition opportunity that could generate greater shareholders value," he said.

Yehey! for its part plans to undergo a major facelift this year to make the site more friendly and revelant to its users, even as it is moving to transform itself from being a plain media company to becoming a full-scale online marketing partner to its clients. Aside from being an online advertising medium, it will offer online marketing solutions offering full creative and interactive marketing services.

Gimenez said Yehey! will also continue to invest in the development of new channels to make the company globally competitive and world class.

Meanwhile, eBusiness Services found itself benefitting from the record 25-percent growth in OFW remittances last year, which grew to $10.7 billion. The company in 2005 processed 64 percent more transactions than in the previous year. The amount of OFW remittances it processed also increased by 37 percent year-on-year, surpassing the 25-percent growth in remittances through bank channels.

To address the intensifying competition from local and international alternative remittance services providers, the company focused on expanding its network to service customers directly through company-owned branches, enabling it to process more than half of the transactions in 2005 through this mode. eBiz now operates in key cities nationwide even as it took advantage of the growing trend of increasing average incomes in former rural areas.

eBusiness currently has a partnership with Philequity Fund which allowed the latter’s investor base to grow seven-fold, not only with local investors but also those from the US, Saudi Arabia, Hong Kong and other Asia-Pacific countries.

Gimenez noted that Western Union’s increasing presence in over 200 countries and 260,000 agent locations worldwide should enable direct agents such as eBiz to capture a substantial portion of the continuously expanding remittance market. At the same time, Western Union’s added focus on its domestic money transfer service will enable agents to compete with banks in addressing the needs of the still substantial number of Filipinos who do not have bank accounts, he said. The Bangko Sentral ng Pilipinas expects remittances to grow by a further 10 percent from $10.7 billion last year.