Group also considering applying for digital banking licence to further expand business opportunities in fintech
PETALING JAYA: Paramount Corp Bhd’s wholly owned subsidiary Magna Intelligent Sdn Bhd is venturing into the fintech sector with a RM13.7 million investment into peer-to-peer (P2P) financing platform Omegaxis for a 30% stake.
The group has entered into a conditional share subscription agreement with P2P Venture Sdn Bhd and Omegaxis Sdn Bhd for the exercise.
Omegaxis is a special purpose vehicle set up to facilitate Paramount’s proposed investment in P2P financing platforms in collaboration with P2P Venture with a 30:70 ownership structure.
The move is in line with its five-year strategic plan (2020-2024) to identify new sources of earnings, particularly those in the digital space, after the divestment of its education business.
Paramount, through Magna Intelligent, also invested in Australian Securities Exchange-listed edutech company Openlearning Ltd which operates an online education platform for tertiary education institutions.
It highlighted that the investment will also pave the way for other business opportunities in the digital space, including applying to Bank Negara Malaysia for a digital banking licence, an option it is considering.
Upon completion of the transaction, Omegaxis will have a 63.5% stake in Peoplender Sdn Bhd which has obtained approval from the Monetary Authority of Singapore to operate a P2P financing platform in Singapore via its subsidiary Fundaztic SG Pte Ltd, that has yet to launch.
Domestically, Peoplender is a recognised market operator registered with the Securities Commission Malaysia which operates Fundaztic, an electronic P2P financing platform for start-ups and micro to small and medium enterprises. The platform has also launched a secondary market.
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.
It pointed out that 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.
In addition, a stronger appetite from investors who seek higher returns in a low interest rate environment, and growing acceptance of P2P financing as an alternative financing and investment source in Malaysia bode well for the P2P financing industry in Malaysia.
It believes Fundaztic’s business model can be replicated in other P2P financing operators and Omegaxis will be able to expand regionally in the future.
Paramount stated that the proposed investment is a related party transaction in which the executive directors of Paramount have interest but have abstained from all deliberation and voting on the matter at the board meetings of Paramount and Magna Intelligent.
The proposed investment is expected to be completed by the end of Q2’21 after receiving the relevant approvals.
As published: The Sun