Source : THE EDGE MALAYSIA

"There's an old Chinese saying that if you want to look for treasure, you should be diving to find the sunken emperor's ship, even though many have been there before you. That's because there's bound to be some treasure left there," quips Tan Sri Dr Niniah Mogan Lourdenadin.

In his first interview with media since taking over MBf Holdings Bhd in 2002, the 53-year old Lourdenadin says he applied that philosophy to his venture into MBf.

Five years later, he reckons the bet is paying off.

"It has been a gamble but we are almost out of the woods now," says the doctor, who counts MBf Holdings as his first and only listed business vehicle so far.

The remaining treasures of MBf Holdings that Lourdenadin has found worthwhile pursuing are the franchises in the company. MBf Holdings was a successful credit card issuer under the late Tan Sri Loy Hean Heang, when the group also owned the largest finance company in the country. However, rapid over-expansion and the financial crisis of 1997 led the company into troubled waters.

It entered into two sets of debt restructuring schemes involving foreign and local creditors. But the foreign creditors had a bigger security compared to the locals. It was then that Lourdenadin emerged to buy off MBf shares from the foreign creditors, paving the way for him to take control of MBf Holdings from the Loy family.

The intriguing thing about the venture is that the businessman, who already had property and trading businesses in such farflung places as the UK and Micronesia, had initially been keen to buy only MBf Carpenters, an Australia-based company that did a lot of trading in the South Pacific Islands.

But Lourdenadin then learnt that the entire MBf Holdings was for sale and reckoned that he could make something of the group of companies which held a lot of franchises. MBf Holdings holds the franchise to issue Visa and Master Card credit cards and a slew of retail franchises serving the Pacific Islands, which include Papua New Guinea and Fiji. The franchises are from international brand names in the automobile and heavy equipment sectors and include running petrol kiosks for Mobil.

"If you value and understand how to build on existing franchises, then you can make something out of it. It is the intangible assets of the company that hold the potential," says Lourdenadin.

MBf Holdings' credit card business recorded a profit before tax of RM75 million last year. The credit card operation got a shot in the arm when Bank Negara Malaysia allowed MBf Holdings to provide its own line of credit to fund its credit card venture. MBf Holdings did so by raising RM250 million from the issuance of debt papers last year. This was a boost for MBf Holdings as the profit margins for the credit card business are better when the issuer uses its own funds to finance the credit of cardholders, as op- posed to borrowing funds from banks for this purpose.

Since getting its own line of credit, MBf Holdings has aggressively sought to issue more credit cards, managing to secure 100,000 new cardholders in the nine months since last October when it was able to draw down its own funds.

MBf Holdings is placed fifth in the domestic credit card market, measured by total funds lent out. MBf has lent out a total of RM1.35 billion to its credit cardholders, using funds borrowed from the AmBank group. Since October, it has given out an additional RM250 million of its own money to its cardholders. Citibank leads the local market, with an estimated RM3.6 billion lent out, according to some analyst reports.

Aggressive marketing tactics have also been the norm. Indeed, Lourdenadin reckons that MBf Holdings will be able to fight the stiff competition in this line of business. On the face of it, banks have an upper hand in this game, not only by virtue of having suffi- cient funds to tap to finance their credit card venture but also from having a ready pool of customers who use their other services.

"MBf is a dedicated card issuer. Anyone dedicated to a certain industry always has an edge. Also, our customer value proposition is better," says Lourdenadin on how he competes with banks. He cites the company's latest promotion campaign where new cardholders can own a 37-inch Samsung LCD TV at RM4,300 to be repaid in 43 months at RMIOO a month.