Catcha become outsourced partner of Mavcap to invest in Startup

New business weekly in Malaysia, Focus reported that Catcha Media Berhad become outsourced partner of Mavcap to manage RM150million fund to provide seed and earlier stage investment for technology startup in Asean.

It is believed that the fund will be jointly managed by  Patrick Grove, CEO of Catcha Media Berhad and Khailee Ng,  Co-founder and CEO of Says.com .

Says.com

Earlier July 2013, ACE Bursa Malaysia listed Catcha Media Berhad confirmed that the final agreements with Youth Asia Sdn Bhd to merge certain assets with Says Sdn Bhd, the owner of Says.com has been formally signed. The announcement made at Bursa Malaysia formalizes the RM60 million merger that will see Catcha Media subsidiaries and Says.com come together to form one of the country’s largest digital advertising business by reach, clients and spend, and potentially revolutionise the way advertisers reach out to Malaysia’s increasingly socially connected populace.

Catcha Media  has 4 business, publishing, online media, ecommerce and online classified. Only Publishing and online classified is profitable for year ended 2012.

E-commerce and profit guarantee

For Catcha Media, E-commerce business registered most loss for year ended 2012. This segment comprises Catcha Media's Dealmate.com  and Hauteavenue.com

Hauteavenue.com,  a Singapore base operator of the members-only luxury fashion sales website, which was acquired by Catcha Media over a year ago. There is a profit guarantee from the vendors of Hauteavenue.com of S$1.5mil (RM3.7mil) for the 12 months after the completion of the deal. It is not sure why Catcha Media never claim profit guarantee from vendor.

Dealmates.com – a joint venture between Catcha Group and Intel Capital. Catcha Media own 70 per cent and Intel Capital, venture capital arm of Intel,  – owns 25 per cent of the company. The rest is with management.

Conflict of interest / Joel Neoh

Dealmates began as a group buying services in 2011.  This should be a conflict of interest with another business of Youth Asia Sdn Bhd GroupsMore.com, which has been acquired by Groupon.com. Co-founder of Youth Asia Sdn Bhd, Joel Neoh, have since become CEO of Groupon Malaysia, the merged entity with Groupon and quickly rise to oversee operation of Groupon Taiwan. Today, Neoh is also the vice-president and general manager for Groupon's South-East Asia operations, which includes Malaysia, Thailand, Singapore and India. If Joel Neoh able to keep the pace. It might be possible that President of Groupon will be a Malaysian one day!

Okay, back to Catcha,  Dealmates claim they have converted into online flash site and no longer a group buying website like Groupon and might not have conflict of interest with vendor of Says.com.

Publishing

Catcha Publishing publishes and distributes 14 magazine in 17 editions including JUICE, Kitchen+Bathroom,EVO and Prestige.

Online classified

The online classifieds segment comprises iCar Asia Ltd.iCar Asia’s car sales websites in Thailand, Malaysia and Indonesia reach 1.5 million people every month. The company was listed on the ASX in September last year with a $10 million capital raising. In March carsales.com acquired a 19.9 per cent stake in iCar Asia.

iCar Asia’s Malaysian website Carlist.my is now the number one classified site in Malaysia, with nearly 104,000 listings. In Indonesia its Mobil123.com has increased total listings to over 105,000. In Thailand Autospinn.com remains the leading automotive content website.

There is little mentioned about Catcha's Online media segment but it still reporting loss for year 2012'

Online media doubts

Both Catcha Media and Says.com claim they are already a formidable presence in the region, with Catcha Media recording an estimated monthly reach of 8 million people and Says.com recording an estimated monthly reach of 6 million people. Collectively the companies service over 500 large clients, with brands like Petronas, Proton, Maybank, Maxis, MAS, Unilever, Samsung, Guinness Anchor and Carlsberg ranking amongst its biggest spenders.

However, monthly  comScore’s traffic comparison on top 30 website in Malaysia never show Catcha nor Says.com on the list for 2 consecutive month.

Synergy

 Says.com is a crowd-sourced content platform that leverages active social media users to curate and share trending news items, paying them when they broadcast advertiser-sponsored content. It currently boasts a portfolio of clients which includes Nike, Coca-Cola, Unilever, Maxis and Nestle.

 Catcha Media Berhad claim already established digital content leadership and broad online advertising base, with the power of social media and viral marketing of Says.com’s crowd-sourced curation service, has already generated significant buzz within the advertising industry. Said Patrick Grove, CEO of Catcha Media Berhad of the new company’s plans.

The proposed merger is valued at RM60 million, and under the deal, Catcha Media will be entitled to 35 million shares to be issued by NewCo while Says, which is owned by Youth Asia Sdn Bhd, is set to receive RM6 million in cash and 15 million shares. According to Grove, the merger value was based on the earnings of both companies and what they potentially could have been if both companies had been a single entity throughout the 2012 financial year. This is an acceptable valuation method with Grove sharing that a PE (Price Earnings) ratio of 10 was applied for the RM60 million valuation.

According to a Bernama report which quotes from RHB Research, the merger could potentially quicken Catcha’s turnaround.

"Based on a study by our source, Says.com is profitable and has an annual net profit ranging from RM1 million to RM2.5 million per annum. Post-merger, Catcha Media will hold a 70% stake in Says.com, which we think will boost the former's earnings," said the research house.

Ng noted that potential synergies are manifold when “you put leaders in social content distribution, leaders in content creation, and an advertising network that reaches 9.78 million Malaysians” together.

“Beyond that, it is also about two entrepreneurs and their passionate and driven teams coming together to build the future of media and advertising,” he added.

Ng said that advertisers are always excited to use Says.com to get their branded content shared on social media. In some cases, the advertisers would request for the company to create the content, which the team would need to decline because of its "laser focus and expertise in the distribution of social content."

On the flip side, Catcha Media's publishing unit has always been in the business of creating custom content, and in many cases, entire content channels and magazines for advertisers.

“At the same time, they are also frequently requested to integrate social media-centric solutions into the fold. The more we talked, the more opportunities we saw. That's when we knew that our shared vision for the future of advertising had to be acted upon,” said Ng.

Mavcap 

Youth Asia, parent company of Says, is an investee of Teak Capital, a technology-focused venture capital management corporation, also an outsourced partner of Mavcap. This mean Khailee Ng himself  is benefited from Mavcap indirectly few years back.

Patrick Grove

After graduating with a commerce degree in 1996 Patrick Grove, who was born in Singapore but grew up in Sydney, he started working at accounting firm Arthur Andersen in 1997. By mid-1999, the original internet boom was under way, and Grove was itching to be part of it.

He had spent most of the time in the firm’s corporate recovery division, but was later seconded to the corporate finance division, where he started writing business plans for internet IPOs in Australia.
“I was disillusioned,” he says. “I was raising money for people that I felt were not worthy of the money investors were giving them. I thought, if it’s this easy to raise money with a good plan, I can do it myself.”

However, the dotcom bubble meant the IPO never happened. Patrick become a "Veteran entrepreneur". Catcha Media only get IPO in  July 2011. 12 years after he found the company.  However, he experience in corporate finance before he become entrepreneur make him qualified to evaluated a business plan. And he understand the challenge of startup and technology entrepreneur. His weakness can be supported by Khailee Ng of Says.com.

Khailee Ng


Khailee Ng, co-founder of Youth Asia Sdn Bhd successfully raise seed capital funding from Teak Capital within short period of time after founded Youth Asia Sdn Bhd. And Youth Asia Sdn Bhd have two startup that successfully being acquired. Groupsmore acquired by Groupon and Says.com acquired by Catcha Media Bhd. He must able to evaluate the creative, technology and growth potential of a startup. It would be more beneficial if another co-founder of Youth Asia Sdn Bhd, Vice President of Groupon, Joel Neoh be included in the evaluation committee.

Joel Neoh


Catcha Media will speed up it merger and acquisition process, which started since it IPO. Will Startup environment in Malaysia and Malaysia Multimedia Super Corridor (MSC) will be change is yet to be see.

Grove has an indirect stake of 58.5% in Catcha Media as at 15 May via Catcha Group Pte Ltd. The media company largest shareholder. It is follow by HSC Care Sdn Bhd, Datuk Justin Leong of Genting Bhd and Star Publications (M) Sdn Bhd. Star Publication has it own Star Accelerator Fund