OVER the past half a century, Paramount Corp Bhd made big strides. It started from its brick-and-mortar roots as a humble rice miller to become a listed property player with investments in education. Now, it has become a disruptor as it ventures into the fintech space.
The group recently announced its move to acquire a stake in Fundaztic, a peer-to-peer (P2P) lending platform, marking its first steps into digital finance, which may also pave the way for a possible digital banking venture.
To recap, Paramount is acquiring a 30% stake in special-purpose vehicle Omegaxis Sdn Bhd, which will own a 63.5% stake in Fundaztic operator Peoplender Sdn Bhd.
The investment, which will cost Paramount RM13.7 million, is a related party transaction. Its CEO Jeffrey Chew owns 29.47% in ordinary shares and 37.39% in redeemable convertible cumulative preference shares in P2P Venture Sdn Bhd, as well as indirect equity interests in Omegaxis, Peoplender and Fundaztic SG Pte Ltd by virtue of P2P Venture’s interest in these companies.
Meanwhile, chairman Datuk Teo Chiang Quan has an indirect 14.28% equity interest in Peoplender, by virtue of his son Benjamin Teo Jong Hian, who is also an executive director of Paramount.
The acquisition is in line with Paramount’s five-year strategic plan to identify new sources of earnings, with a focus on the digital space, following the divestment of its education business.
Chew says the group has always had entrepreneurship in its corporate DNA, and the move to digitise its existing operations as well as the exploration of other digital opportunities is a natural progression.
“We need to digitise the businesses we want to keep. If we cannot digitise them, we would be better off getting rid of them. For future investments, we believe digital is the way forward,” he tells The Edge.
He adds that was partly the reason behind the group’s divestment of its education business, as it was a challenge to digitise it.
In June 2019, Paramount announced its plan to divest its controlling stake in its K-12 education business — comprising its majority stakes in Paramount Education Sdn Bhd, Paramount Education (Klang) Sdn Bhd and Sri KDU Sdn Bhd — to Prestigion Education Sdn Bhd for RM540.5 million.
The group retained an effective 20% stake in the pre-tertiary education business.
While the education investments are still profitable, Paramount was concerned about the growing trend of digital learning and what it would mean for the conventional method of learning in physical classes, amid the rising adoption of online learning platforms such as Coursera, Skillshare and Udemy.
Chew says it all boils down to the essence of education — the transfer of knowledge.
“We are not really building anything physical in the education business. It’s all about the transfer of information to the students. We are just training the students in class [which can be done digitally],” he explains.
Following the divestment, the board came up with five strategic options for Paramount — either to acquire a construction company for in-house works, invest in a real estate investment trust, venture into proptech (property technology), venture into the property financing space or set up an investment unit that would invest in multiple businesses.
It was decided that the group would invest up to RM100 million over the next five years in start-ups — preferably those in the digital space — which included its investment in OpenLearning Ltd, an Australian online education platform for tertiary education institutions listed on the Australian Securities Exchange, as well as in Fundaztic.