KUALA LUMPUR, Nov 7 — Tune Money, Malaysia's first online “budget” finance house, is downsizing amid losses and shareholder disagreement that led to the resignation of its chief executive last week.
On Oct 31, Tune's CEO and 10 per cent shareholder Tengku Zafrul Tengku Abdul Aziz quit abruptly and without explanation. No successor has been named yet.
Tune is a spin-off from AirAsia, Asia's largest budget airline. Inspired by AirAsia's success, its founder and driving force Datuk Tony Fernandes moved to create a host of other budget services including Tune Money and Tune Hotels.
Its business model was simple. Fernandes reckoned financial services such as insurance, for example, were more expensive than they need be because they involved middlemen who took commissions and racked up costs.
He thought the way around this was the Internet, so Tune began by selling insurance online at cheaper rates by cutting out the middleman.
The insurance cover and debit cards offered by Tune came from CIMB, Malaysia's largest investment bank, which took a 25 per cent interest in Tune Money, initially capitalised at RM26.6 million back in 2006.
Executives familiar with the boutique finance house said CIMB boss Nazir Razak and Fernandes persuaded Tengku Zafrul to head the outfit.
Tune's other shareholders are Lim Kean Onn (8 per cent), Datuk Kalimullah Hassan (8 per cent) and Fernandes's various private companies (49 per cent).
Lim and Kalimullah are partners in ECM-Libra, one of Malaysia's smaller investment banks. Tengku Zafrul used to head Avenue Assets, a broking house bought by ECM-Libra almost three years ago.
The executives said disagreement between Tengku Zafrul and his other partners, notably Lim and Kalimullah, began surfacing after he sought to grow the business faster than either of them thought he should.
A particular grievance was Tengku Zafrul's idea to start a unit trust business and hire heavy hitters at relatively high salaries.
Resentment began building because shareholders were asked to support cash calls fairly regularly at a time when Tune was making losses, according to the executives.
According to documents lodged with the Companies Commission, Tune made a net loss of RM8.6 million for the year to end-December 2007 after a loss of slightly over RM1 million the previous year.
Matters came to a head last month during a meeting to consider another cash call of over RM5 million from shareholders, according to the executives. Kalimullah and Lim flatly refused to subscribe to the call and, in subsequent discussions, the unit trust scheme was jettisoned.
Tengku Zafrul handed in his resignation soon after the meeting and, given that the unit trust plan had been abandoned, the resignations of the more recent hires are likely to follow, the executives added. — Business Times Singapore
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Perhaps you can head the EPF or Valuecap - the burn rate is 'extraordinary' over there, and the partners wont question you, ever! Suit your style!
Tune no more... turn to Valuecap and make it BurnCap!