KUALA LUMPUR: MARC Ratings has placed its AA-IS rating on Zetrix AI Bhd’s Islamic Medium-Term Notes (IMTN) programme of up to RM2bil on MARCWatch Developing amid concerns over its founder’s reduced shareholding and rising borrowings.

“The rating is placed on MARCWatch Developing amid concerns over a substantial reduction in shareholding of founder Wong Thean Soon (TS Wong) in Zetrix AI to 12.1% (direct: 6.5%; indirect: 5.6%) from 30%, largely triggered by margin calls,” the rating agency said.

The reduction has narrowed Wong’s buffer for complying with a covenant under the IMTN programme requiring him to remain the group’s single largest shareholder.

MARC said a further reduction in his shareholding could lead to a covenant breach.

The agency is also assessing Zetrix AI’s borrowings, which rose to RM2.2bil as at end-June 2026 from RM160.5mil in 2021, to fund development of its artificial intelligence-related services and blockchain platform.

Cumulative development expenditure increased to RM3.7bil as at end-June 2026 from RM322.5mil in 2021, accounting for 56% of total assets. The group began its blockchain development in August 2021.

While Zetrix AI continued to generate healthy operating cash flows, MARC said its debt-to-equity ratio rose to 0.50 times in the first half of 2026 from 0.10 times in 2021.

Private placements and growth in retained earnings had partly moderated the impact of higher borrowings on leverage.

However, MARC said leverage could increase further to support investments in robotics and the consolidation of the group’s Philippines venture.

Zetrix AI signed a memorandum of understanding on July 7, 2026 to develop public blockchain infrastructure in the Philippines using its Zetrix platform.

The rating agency said revenue from blockchain and AI-related services had increased since commercialisation began in 2023, but the business needed to scale up in a timely manner to match the capital invested.

“MARC Ratings will reassess and take appropriate rating action as necessary when the sell-down situation stabilises, given that further reduction in the founder’s shareholding could lead to a covenant breach,” it said.

Additionally, the rating agency is assessing the impact of a further significant increase in borrowings to fund continued development expenditure on the group’s balance sheet and earnings leverage over the near-to-medium term.