KUALA LUMPUR (March 3): Velocity Capital Partner Bhd (KL:VELOCITY) said it is acquiring a 6.49% equity stake in its former shareholder MMAG Holdings Bhd (MMAG) for RM60 million cash

The group is buying the stake, comprising 150 million shares, from MMAG’s major shareholder, Chan Swee Ying, at 40 sen per share, which is an 8.05% discount to the three-month average share price of 43.5 sen, according to Velocity in a filing with Bursa Malaysia on Monday. 

MMAG was previously the major shareholders of Velocity, which was then known as CSH Alliance Bhd, before divesting of its entire 16.61% equity interest, together with 194.5 million warrants, for RM37.36 million cash in September 2023.

Velocity said its investment in MMAG builds on an existing partnership between its transportation and logistics arm, Line Haul Sdn Bhd, and MMAG’s indirect subsidiary, Line Clear Express Sdn Bhd.

The companies have collaborated on hub-to-hub middle-mile logistics services, and Velocity sees the acquisition as an opportunity to deepen synergies across MMAG’s integrated supply chain network.

"The investment is expected to combine Velocity’s expertise in transportation, mid-mile trucking, and pallet network logistics with MMAG’s full-fledged supply chain ecosystem, which includes mobile & fulfilment services, aviation operations, and courier and logistics solutions," said Velocity.

"Both companies will be able to streamline resources, enhance fleet efficiency, reduce costs, and accelerate turnaround times, which could ultimately boost operational capacity and maximise revenue potential," it added.

MMAG, which operates courier, logistics, and air cargo services, is said to have been expanding its aviation operations and investing in technology to streamline fulfilment and delivery processes.

For the 18-month financial period ended Sept 30, 2024, MMAG recorded a loss after tax of RM95.58 million on RM824.37 million in revenue.

Velocity said the group has the right to appoint one director to MMAG’s board, and a first right of refusal should Chan decide to sell her remaining 18.72% stake.

The acquisition is funded through Velocity’s internal cash reserves and is not expected to impact the company’s gearing or share capital.

In the 12 months leading up to this investment, Velocity executed two significant transactions with MMAG. In June 2024, Velocity sold an 85% stake in Cipta X Sdn Bhd (formerly CSH Solutions Sdn Bhd) to MMAG for RM20 million.

Then in September 2024, Velocity disposed of nine million shares in Line Clear Express to MMAG’s subsidiary, MMAG Omni Ventures Sdn Bhd, for RM13.75 million.

It is worth noting that Azman Mat Ali, Velocity’s independent non-executive chairman, also serves as an independent non-executive director in MMAG. While he holds no direct or indirect interest in either company, and MMAG is not a direct party to the investment, Azman has voluntarily abstained from all board deliberations and voting on the acquisition.

Shares in Velocity Capital closed unchanged at eight sen on Monday, valuing the group at RM110.51 million.