IT’S been 17 years in the making, but with its US$11.5 million (RM50.6 million) April 7 all cash acquisition of Hong Kong-based financial data and trading solutions provider AFE Solutions Ltd, Andrew Tiang, managing director and co-founder of N2N Connect Bhd, one of Malaysia’s largest provider of online real time trading platform for capital markets, can finally claim to be Asia’s largest one-stop service provider in the financial investment industry.
“When we incorporated the company in 2000, we aspired to become Asia’s largest one stop service provider in the financial investment industry and the AFE acquisition is strategic to help us fulfil that mission,” he tells DNA.
N2N Connect is present mainly in South Asia and Middle East whereas AFE are in HK, China, Macau, Vietnam and Thailand. “Collectively we now cover all of Asia except Japan, Korea and Taiwan. That effectively make us Pan Asia now and definitely the largest Asian based platform provider now,” claims Tiang to DNA.
Besides helping N2N Connect extend its regional presence, the acquisition of the 34-year old AFE, which registered HK$110 million in revenue with HK$14 million profits in 2016, combines core technologies from two leaders in the field of capital and financial markets with AFE owning a number of intellectual property in data streaming and back office systems.
According to Tiang, combining the services of both allows N2N Connect to offer a comprehensive range of solutions which extends beyond boarders; connecting demanding and competitive clients to multi-exchange, assets classes and multi-currency settlements.
AFE’s focus on information services complements N2N Connect’s desire to grow its information services business to complement its strong trading services. According to Tiang, “The combine entity would be large in both segments, namely trading and information service and that will be very appealing to our clients and prospects. Both our trading installed base and terminal installed base will increase by 200% each on a consolidated basis.”
The acquisition also offers N2N Connect upsell opportunities. “We plan to upsell into their base as they are primarily HK/China base trading whereas we are more international with a mixed or multi assets class which is what many HK Brokers are looking for now” explains Tiang.
Besides the strategic value of the deal, Tiang points out that, “Financially our PE ratio has been enhanced with a 50% reduction. That make us very attractive valuation-wise compared to others whose PE would be 4x ours.
Rob Agnew, the newly appointed CEO of AFE, which has 70 staff based in HK says, "We are delighted to be a part of the N2N Connect family and to start an exciting chapter of development for AFE, as one of Hong Kong, Macau, Thailand and Vietnam's leading financial technology companies with its strengths in market data and trading technologies.” He believes that they will complement the ASEAN coverage of N2N Connect to be one of the leading trading platform providers.
According to Tiang, the next bold step is to facilitate the formation of Asia’s largest trading hub, enabling brokers, fund managers and even retail investors with direct access to trade multiple assets class directly across multiple exchanges, in their very own native languages.
“No others come close to AFE or N2N individually, let alone as a combined entity under one group. We have massive synergy in terms of cost saving, domain knowledge, content licensing and distribution powers. We are now Thomson Reuters Largest single customer in Asia.”