(This report has been amended for accuracy)
KUALA LUMPUR (April 15): Paramount Corp Bhd’s wholly-owned Magna Intelligent Sdn Bhd is investing in a peer-to-peer (P2P) financing platform by acquiring a 30% stake in Omegaxis Sdn Bhd for RM13.7 million, which the group sees as its entry point into the fintech sector.
Omegaxis is a special purpose vehicle (SPV) set up to facilitate Paramount’s proposed investment in P2P financing platforms, with the balance 70% stake in the vehicle to be held by P2P Venture Sdn Bhd, in which Paramount's group chief executive officer Chew Sun Teong has direct equity interests of 29.47%, and 37.39% in redeemable convertible cumulative preference shares.
In a statement, Paramount said the proposed investment, which is a related party transaction due to Chew's interests, is in line with its five-year strategic plan to identify new sources of earnings, with a focus on the digital space, following the divestment of its education business.
"The proposed investment will also serve as a strategic alliance to pave the way for other business opportunities in the digital space, including applying to Bank Negara Malaysia for a digital banking licence that Paramount is exploring," Paramount said.
It said the digital space venture will future proof the group for long-term sustainability, highlighting that it has also invested in Openlearning Ltd, an Australian edutech which operates an online education platform for tertiary education institutions that is now listed on the Australian Securities Exchange.
On completion of the transaction, Omegaxis will have a 63.5% stake in Peoplender Sdn Bhd, in which Chew, together with executive director Benjamin Teo Jong Hian have stakes.
“Peoplender is a Recognised Market Operator registered with the Securities Commission Malaysia which operates Fundaztic, an electronic P2P financing platform launched in 2017 for start-ups and micro to small and medium enterprises (MSME) to procure financing for their working capital by way of issuing investment notes to investors.
“In July 2020, Fundaztic was also the first P2P platform in Malaysia to launch a secondary market,” said the group.
Peoplender’s Singapore subsidiary Fundaztic SG Pte Ltd has also received approval from the Monetary Authority of Singapore to operate a P2P financing platform in the island state, but has yet to launch.
Paramount said the proposed investment is expected to benefit from the tremendous room for the P2P financing industry to cater to the financing needs of Malaysian SMEs.
“Currently, financial institutions are the dominant source of financing for SMEs, with RM161.03 billion disbursed as at August 2020. while the P2P financing industry only financed RM418.6 million in 2019 and RM289.5 million up to September 2020,” it said.
Paramount said the executive directors of Paramount who have interests in this RPT have abstained from all deliberations on the proposed investment, as well as the vote on the matter at the board meetings of Paramount and MISB. The group expects the proposed investment to be completed by the end of the second quarter this year.
Paramount shares fell 0.5 sen or 0.6% to 83 sen today, giving it a market capitalisation of RM513.93 million.