MSCM proposes diversification into moneylending

PETALING JAYA: MSCM Holdings Bhd has proposed a diversification of its existing businesses to include moneylending.

MSCM is principally involved in search and advertising, specialising in marketing as a service comprising development and operation of online business platforms, production of print directories and internet advertising; information technology (IT); and supply chain management although it has not commenced its supply chain management business.

MSCM’s wholly-owned subsidiary Food Cheetah Sdn Bhd had obtained a moneylender’s licence issued by the Housing and Local Government Ministry, which is valid for two years until Nov 14, 2021.

Although the group did not have prior experience in moneylending business, it will leverage on the capabilities, experience and networking of the company’s executive director Lim Peng Tong, who has the relevant expertise and experience in risk management and banking industry to spearhead the group’s moneylending business.

Lim, a substantial shareholder of MSCM, retired from Malayan Banking Bhd as the regional head of business banking of northern region for Penang, Kedah and Perlis. With more than 38 years’ experience in the financial and banking industry, he is an established banker with vast knowledge and skills in the banking field, as well as supervisory and leadership roles, in commercial and corporate lending activities involving marketing, credit processes, business development and relationship management.

In addition, the group plans to hire qualified compliance and risk personnel to support the implementation of the group’s moneylending business upon obtaining the requisite approval for the exercise.

“In view of the positive outlook of the loan market in Malaysia, the board expects the moneylending business to contribute positively to the group’s future earnings after its commencement which is expected to be in the second half of 2020, which will potentially be 25% or more of the group’s net profits and/or result in a diversion of 25% or more of the net assets of the group to its moneylending business operation,“ MSCM said in a stock exchange filing.

MSCM is required to obtain its shareholders’ approval in an EGM to be convened for the proposed diversification. Notwithstanding the exercise, the group remains committed to its existing businesses in investment holding, search and advertising, IT and supply chain management.

MSCM has also proposed a variation to the utilisation of proceeds raised from its rights issue, including to reallocate RM17 million to fund the initial working capital of the group’s moneylending business.

Additional financial commitment is expected to be funded via the group’s internally generated funds and/or proceeds from future equity or debt fundraising exercises.

The group currently derives most of its revenue from its search and advertising business which has been facing erosion of profit margin due to the ever-changing landscape and advancement of technology in advertising and marketing industry.

“In order to improve the group’s financial performance and to enhance the group’s prospect, the group proposes to have additional income streams by diversifying its existing businesses to include moneylending business.”

Further, the board believes that through involvement in moneylending business, the group is able to provide financial solutions to transportation and logistics entrepreneurs/companies to fund their purchases of reefer trucks and/or working capital, thereby strengthen their capability with enhanced infrastructure such as transport vehicles for pick and delivery facilities.

“These companies are expected to give favourable term and pricing for the transportation and logistics services to support the group’s cold chain business in future through the interdependent business relationship. The exercise is therefore expected to complement the group’s supply chain management business.”

The group also intends to extend its moneylending facilities to any segments which are underserved by licensed financial institutions and co-operatives.

The board believes that the moneylending business in Malaysia is a viable and growing business for the company to venture into as there are demands by individuals and corporates for financing from non-bank financial service providers (such as licensed moneylenders) for various reasons such as personal financing, business start-up and expansion, vehicle and equipment financing, purchase of land/properties, project financing and others.

The board expects the proposals to be completed in the second quarter of 2020.

source https://www.thesundaily.my/business/mscm-proposes-diversification-into-moneylending-JD2162182