KUALA LUMPUR (Dec 6): Frozen food manufacturer Kawan Food Bhd (KL:KAWAN) is venturing into the supply and distribution of information technology equipment via a joint venture with several individuals, including its founder cum major shareholder, and its current chairman.
It has, via its wholly-owned KG Pastry Marketing Sdn Bhd (KGPM), inked a joint venture agreement with Sun Cheng Leng, Huang Er-Wen, Gan Thiam Chai and Lim Hun Soon @ David Lim on Friday to undertake the business via a special purpose vehicle, Reka Innotech Sdn Bhd.
Gan is chairman emeritus of Kawan Food as well as its founder, with a 7.28% stake in Kawan Food. Lim, currently Kawan Food's chairman, also sits on the board of companies like Press Metal Aluminium Holdings Bhd, TSA Group Bhd and Public Investment Bank Bhd as their independent non-executive director.
According to Kawan Food's bourse filing on Friday, KGPM will own a 51% stake in the SPV that will have a share capital of RM2.5 million, comprising 2.5 million shares. Sun will take a 30% stake, Huang 9%, and Gan and Lim 5% each. They will take up their stake in the JV in proportion to their shareholding at RM1 per share. The parties will fund their investment in the SPV through internal funds and cash.
The SPV will acquire Realtech Automation Sdn Bhd from Sun for RM2.5 million. Incorporated in 2008 and mainly involved in engineering services and industrial automation, Realtech Automation was recently appointed the agency and distributor of Super Micro Computer Inc in Malaysia, said Kawan Food.
Sun, via Realtech Automation, has also been working closely with the installation of servers within data centres in the past three years, it said.
The new JV business will be led by Sun as chief executive officer, said Kawan Food. Huang will oversee supply chain management, while Gan and Lim will contribute strategic advisory and business insights.
Under the deal, Kawan Food will secure the necessary banking facilities to support the operational and strategic growth of the JV business. It shall also subscribe for preference shares amounting to RM25 million, which shall be earmarked for the JV's working capital, in return for a dividend rate of 8% per annum.
"The joint venture will enable Kawan Group to diversify into new businesses," the group said.
The partnership is expected to be completed by the first quarter of 2025.
Kawan Food’s share price dipped two sen or 1.2% to close at RM1.67 on Friday, valuing the company at RM607.94 million. The stock is down nearly 7.7% year-to-date.