Goh Peng Ooi and Silverlake featured in Forbes Asia (Special issue, March 2015)
Goh Peng Ooi has been selling software to banks for more than 25 years, but he’s much more comfortable talking about math or philosophy than business. “I probably should have been a professor,” he says.
No matter. His Silverlake Axis , based outside Kuala Lumpur, is on a tear. The stock price has more than quadrupled since early 2012, making it one of SoutheastAsia’s most valuable technology companies. And since Goh owns two-thirds, that made him Malaysia’s first and only tech billionaire last year. Now he boasts a net worth of $1.55 billion, up 41% in a year. But the affable and quirky engineer is certainly no plutocrat. “We don’t often get invited back to dinner,” he laughs, joking that he has the social skills of a mathematician when asked about being a billionaire and the social obligations that go with it. “Actually,” he adds, “it’s not so hard to lead a billionaire’s life. It’s easier to have things than not to.”
Silverlake Axis’ business model is simple: It licenses its software to banks, has its engineers install it and collects a recurring maintenance fee. The company isn’t big: It expects to tally just $156 million in revenue for the year ending June 30. But the market swoons over its net profit margins, which reach close to 50%, and seems to be assuming 30% to 40% growth in net profits in the years ahead. Even bad news doesn’t derail its performance for long. In January, when word got out that the $180 billion merger between three of Malaysia’s largest banks had collapsed–meaning that integration work everyone expected Silverlake Axis to get wasn’t going to happen–the share price dropped 7.5% before trading was halted. Within days it rebounded. Still, some analysts are pulling back. “The company is still strong fundamentally, but the market growth assumptions are just a little high,” says Jarick Seet at OSK DMG, who downgraded the stock from neutral to sell in November.
Goh agrees. The company suggests only a 15% rise in net profits this year. And he says that new business may be harder to come by now that most banks in the region are already customers or firmly in a competitor’s camp. But as Seet and others point out, barriers to entry are high, and customers have already invested much and aren’t likely to make a switch.
Goh, 60, grew up in Butterworth in Penang, the son of a butcher. The seventh of ten children, he early on showed a love of learning that propelled him out of a working-class life. He was the only one in his family to go to college, earning a scholarship from the Japanese government to study at the University of Tokyo, starting with nuclear physics and later switching to electrical engineering.
He went to work for IBM IBM -0.08%, moving quickly up the ranks to head its Asia banking solutions group by the late 1980s. Witnessing how banks were using, or not using, technology, he saw an opportunity. Existing systems were archaic or couldn’t be efficiently expanded. So in 1989, after some deliberation, he quit to launch Silverlake Axis. “Better to do it when [my daughter] was 3 than when she was 13. If I failed, I thought it would be better if she never knew her father had once been so successful. And my wife and I knew that whatever happened, at least we could pay for her schooling.” (Today she’s an executive director at the company; he also has a son, who does not work for the company.)
It wasn’t an acrimonious break, and connections to Big Blue still run deep. Silverlake was the code name for an IBM business computer launched at the end of his tenure there, and Goh still uses IBM technology.
Silverlake Axis thrived, in part, because Goh entered the market at the right time. In the late ’80s and early ’90s financial services companies in Asia began to modernize. For all but the biggest banks, building their own systems was too expensive. So after Goh set out on his own, he was able to close three deals worth more than $1 million within months.
He says he likes to throw around ideas such as symmetry and group theory when explaining software systems. Indeed, CT Choo, the first employee Goh hired, laughs: “The theories could be quite irritating. All of us were lost.?… We’d rather not bring him to client meetings.”
Irritating or not, by 1992 some 30% of Malaysia’s banks were customers, though most used Silverlake Axis for smaller pieces of the business, such as their loan programs or technology for automated teller machines. A big break came in 1994, when then-chairman of Singapore’s United Overseas Bank , Wee Cho Yaw, decided to hire the company for a total revamp. Goh says he knew that if he could get this right, the company would be on its way. By 1998 the UOB Group was using Silverlake for all its global operations.
Five years later Silverlake Axis went public in Singapore. Along the way Goh and his staff developed their own software system. Today the company boasts customers in 20 countries across Asia, the Middle East and Africa, but its core market remains Southeast Asia. And he says he has other ideas: He’s been working on a technology for mobile phones, which he explains in his characteristic unintelligible manner, but promises that it’s the future of computing. It’s hard to predict whether that’s the would-be professor talking or the businessman with excellent timing.