KUALA LUMPUR (Oct 9): Souqa Fintech Sdn Bhd is mulling to take legal action against HeiTech Padu Bhd (KL:HTPADU), following HeiTech’s decision to terminate a deal to subscribe to new shares in the fintech company.

HeiTech Padu’s unit Synergy Grid Sdn Bhd on Monday aborted a plan to acquire a block of shares, equivalent to a 30% stake, in Souqa Fintech that operates the payment gateway PayHalal for RM16.17 million.

The proposal was announced by HeiTech’s board on Bursa Malaysia 10 days prior to that on Sept 27.

In a response to The Edge, Souqa Fintech chief executive officer and indirect largest shareholder Patrick Thevarajah said the termination had caused irreversible damage, loss of opportunity, and impacted Souqa Fintech’s reputation.

“The official reason they have is no board approval. However, HeiTech’s company secretary has given us HeiTech’s and Synergy Grid’s board resolution extracts and share subscription agreement.

“Souqa most likely will opt to sue, to set the record straight and seek justice,” Patrick, also known as Pat Salam, told The Edge.

According to Patrick, discussions about the transaction started in April. HeiTech separately said it had wanted to acquire the Souqa Fintech stake to propel further into fintech, as part of a pivot to complement its traditional contracting business.

In announcing the rescission of the deal, HeiTech cited Clause 3.3 of the share sale agreement, which said that either party may terminate the agreement “if any condition is not satisfied”.

In later announcements, HeiTech said that it held a special board of directors meeting last Friday — one week after announcing the proposed acquisition — where “the subscription to 30% of the shares in Souqa Fintech was not approved”.

According to HeiTech’s filings, it had planned to fund the investment with RM11 million in cash, while the remaining RM5.17 million would be settled through invoices detailing services required by Souqa Fintech.

Souqa Fintech is 58.03%-owned by Asad Capital Sdn Bhd, in which Patrick owns a 70% direct stake, company checks showed. Besides, Patrick holds a direct stake of 7.44%.

Aside from the Souqa Fintech stake buy, HeiTech was recently in the news as it is in the running for the RM1 billion National Integrated Immigration System (NIISe) contract from the government, alongside Dagang NeXchange Bhd (KL:DNEX) and Theta Edge Bhd (KL:THETA).

HeiTech’s largest shareholder is Wong Thean Soon with a 1.08% direct stake and 14.99% indirect stake held via MyEG Services Bhd (KL:MYEG).

This is followed by Rosetta Partners Sdn Bhd, linked to Sultan Muhammad V of Kelantan, with a 14.46% stake.

The third largest shareholder is Berjaya Corp Bhd (KL:BJCORP), whose 40.29%-owned REDtone Digital Bhd (KL:REDTONE) holds 6.38% of HeiTech.

At the time of writing on Wednesday, shares of HeiTech had climbed 12 sen or 3% to RM4.14, giving the company a market capitalisation of RM461 million. The counter is up 370% this year.