KUALA LUMPUR (July 16): Electronic components and products firm Scope Industries Bhd (KL:SCOPE) is investing RM20 million in Malacca Securities Sdn Bhd through the subscription of preference shares.

In a Tuesday filing with Bursa Malaysia, Scope said this investment is part of its capital allocation strategy designed to generate stable income from surplus funds.

The group anticipates a fixed dividend yield of 10% per annum from these cumulative, non-convertible, redeemable preference shares (NCRPS), which have a 12-month tenure.

Scope has entered into an agreement to subscribe for 20 million Class B NCRPS in Malacca Securities at RM1 per share, to be fully funded by its internally generated funds.

"The board believes that the investment in Malacca Securities, with its agreed dividend rate, represents a sound investment opportunity and is expected to contribute positively to the earnings of Scope," the company said.

Malacca Securities is a stockbroking firm that also offers corporate finance and investment advisory services. It is a privately held entity, with its largest shareholder being Paradox Corporation Sdn Bhd, which holds a 51% stake. The remaining shares are held by individual shareholders, including directors and members of the founding Lim family.

Under the terms of the agreement, dividends on the preference shares are calculated daily and are payable monthly, contingent upon Malacca Securities’ solvency. The shares carry no voting rights except in limited circumstances and are redeemable at Malacca Securities’ discretion after three months or upon maturity.

Shares in Scope Industries rose 0.5 sen, or 5.88%, to close at nine sen on Tuesday, valuing the Perak-based company at RM103.95 million.