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Hi Andy,
Just to give you a quick update since I attended Silverlake AGM recently. 

The intellectual properties of core banking system belongs to the listed companies and therefore, anyone who wants to use the software must pay the licensing fees at standard schedule rate set by the company.

On Goh’s personal accounts, he owns several private arm to carry out research for his passion in mathematics and technology. As part of his research’s objective, Goh thinks that he can apply the core banking system in other industries, i.e. insurance, airline reservation system, etc but since Goh’s private arm does not own the IP of the software, he’d need to pay the licensing fee and other related costs to Silverlake Axis for the usage of source code.

On the other hand, when the listed company needs technical expertise which mainly held under Goh’s private entities, the listed company would have to pay to Goh for engaging the service works as well. From the board’s perspective, the directors do not want to incur these unnecessary costs which Goh uses for his research under the company as they are very expensive and only engage them on case by case basis.    

Just like it’s not a good idea to mix a venture capital fund with a private equity fund as these two funds can’t be mixed together, Goh separated the research arm and the profitable arm. He also pointed out Google initially parked non-profitable arms like Google X and Ventures under its profitable entities, i.e. Google and recently decided the best way to go is to separate them.

From outsiders’ perspective, it might be easily misunderstood that he is trying to cover up all these hidden expenses off the balance sheet although he did mentioned if he strikes the gold mine from his research arm, the listed company will have the first right of refusal to own the IP and commercialise it. By then, it’d be a matter of how much the acquisition price should be. 

P.S. Deloitte report should be out mid of next month.