KUALA LUMPUR (May 19): In a move to expand its ICT exposure in the e-commerce industry amid the recent launch of Malaysia's Digital Free Trade Zone, Key Alliance Group Bhd (KAG) is buying a networking and system consultants firm for RM1.5 million.

The target company, Progenet Sdn Bhd, is also involved in the supply of computer equipment and cabling.

A share acquisition agreement was inked today between KAG's wholly-owned unit DVM Innovate Sdn Bhd (DISB) and Progenet’s directors, Reuben Gerard Paul and Khoh Being Kee, KAG said in a bourse filing today.

Progenet posted a RM470,000 profit before tax for financial quarter ended March 31, 2017 (1QFY17), with net tangible asset worth RM170,000 as at end-FY15. 

Progenet will be placed under a new company (NewCo) under DISB, which will have a paid-up capital of RM5 million ringgit. 

On completion of the buy, Gerard Paul will be the managing director of Progenet and the NewCo.

The acquisition will be financed internally, KAG said: RM500,000 to be settled in cash, with the remainder to be satisfied via a 20% stake allocation in the NewCo.

KAG said Progenet's existing business will provide synergistic and leveraged opportunities for KAG to expand its ICT exposure into DFTZ-based e-commerce industry, and provide it with an established platform to handle cloud computing and data centre business.

It expects the acquisition to be completed by July 19.

Shares of KAG settled unchanged at 4 sen today, giving it a market capitalisation of RM32.76 million.