By Farah Adilla
KUALA LUMPUR: Paramount Corporation Bhd, via wholly-owned Magna Intelligent Sdn Bhd, is investing in a peer-to-peer (P2P) financing platform as its entry point into the financial technology (fintech) sector.
Paramount said Magna Intelligent had signed a conditional share subscription agreement with P2P Venture Sdn Bhd and Omegaxis Sdn Bhd for a 30 per cent stake in Omegaxis for RM13.7 million.
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.
Paramount said the investment was in line with its five-year (2020-2024) strategic plan to identify new sources of earnings, particularly those in the digital space, after the divestment of its education business.
“Venturing into digital space is to future proof the Paramount group for long term sustainability. The proposed investment will also serve as 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.”
In this respect, Paramount said it had also invested in Openlearning Ltd, an Australian edutech which operates an online education platform for tertiary education institutions and is now listed on the Australian Securities Exchange.
Paramount said upon the completion of the transaction, Omegaxis would have a 63.5 per cent stake in Peoplender Sdn Bhd.
The latter’s subsidiary Fundaztic SG Pte Ltd (Fundaztic Singapore) has received approval from the Monetary Authority of Singapore to operate a P2P financing platform in Singapore but has yet to launch.
Peoplender is a recognised market operator registered with the Securities Commission.
It 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 became the first P2P platform in Malaysia to launch a secondary market.
Paramount said the proposed investment was expected to benefit from the P2P financing industry catering 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.
“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 said.
The company said as the business model of Fundaztic can be replicated in other P2P financing operators, Omegaxis would be able to expand regionally in the future.
As published: News Straits Times