KUALA LUMPUR (June 28): MAG Holdings Bhd is investing S$6.1 million, or RM22 million, to acquire a 50% stake in Lim Shrimp Aquapolis Pte Ltd (LSA), and is entering into a joint venture with PT Gerbang NTB Emas (PT GNE) for shrimp farming and processing on the island of Sumbawa in Indonesia.

According to a statement on Wednesday (June 28), MAG Holdings, which is involved in the production of aquaculture-based food, has signed a term sheet with Lim Shrimp Organization Ltd (LSOL) in relation to the purchase of the equity stake.

LSOL is primarily involved in operating fish farms and fish butcheries, while LSA offers management consultancy services and consultancy in aquaculture township development.

Meanwhile, MAG Holdings’ partnership with PT GNE will involve the formation of a PMA company in Indonesia, in which LSA will hold a 20% equity stake.

Under the agreement, PT GNE will secure exclusive licensing rights from the province of West Nusa Tenggara (NTB) to develop and operate a shrimp processing and cold storage plant in Sumbawa island.

PT GNE will arrange financing of half of the total project cost with Bank NTB and ensure that the PMA company receives tax-free status for three years from the start of commercial operations, as well as facilitate all necessary permits and infrastructure to ensure operations run smoothly.

In addition, PT GNE will facilitate the upgrade of the Pelabuhan Badas port to handle export-capable 20-feet reefer containers and, in partnership with MAG Holdings, process the export shrimps to markets such as the US, EU, China and Australia.

The agreement stipulates that LSA will generate an annual net profit of at least S$2 million within four years from the commencement of the shrimp processing and cold storage plant’s operations, with LSOL undertaking to cover any shortfall in total net profit during the period.

“LSOL further warrants that the profit guarantee’s total capital expenditure and working capital requirement will not surpass US$20 million,” said MAG.

MAG Holdings executive chairman Ng Min Lin said it is enlarging its presence in the shrimp farming industry outside Malaysia through its latest investment and partnership.

“This move underscores our belief in the industry’s potential and reaffirms our commitment to achieving tangible growth and offering sustainable value to our shareholders,” he added.

MAG was traded unchanged at 22 sen on Wednesday, for a market capitalisation of RM341.94 million.