Paramount buys stake in S'pore F&B company

The Star

2 days ago

PETALING JAYA: Paramount Corp Bhd is forking out some RM126.32mil (SG$38.33mil) to acquire a 28% stake in Singapore-based food and beverage (F&B) company, Envictus International Holdings Ltd, from JAG Capital Holdings Sdn Bhd.
Datuk Johari Abdul Ghani, who is Minister of Plantation and Commodities, controls JAG Capital.
In a filing with Bursa Malaysia yesterday, Paramount said the deal was carried out through its wholly-owned subsidiary, Venice Concepts Sdn Bhd, and will be satisfied via a combination of bank borrowings and internally generated funds.
Envictus is involved in the F&B industry particularly in food services, trading and frozen food, and dairies segments. It manages brands such as Texas Chicken and San Francisco Coffee within its food services division.
Paramount Group CEO Jeffrey Chew said in a statement, 'The acquisition of a significant stake in Envictus marks a timely and strategic step forward for Paramount's continuous growth.
'We see potential in the evergreen F&B sector, and this acquisition will diversify our earnings base.'
As at July 28, Paramount owned two restaurants in Kuala Lumpur, namely, Dewakan, Malaysia's only 2-Michelin Star restaurant for two consecutive years since 2024 and a Michelin Green Star recipient in 2025, as well as Bidou, a newly established restaurant offering classical French cuisine.
Paramount noted that following the divestment of its education business in 2018, it has been 'on the look-out for opportunities to participate in new business interests to widen its earnings base', both locally and outside of Malaysia, all of which are within its 2020 to 2025 strategic plan.
The board has, in its recent review of Paramount's next five-year plan (2026 to 2030), agreed to extend its strategy to future-proof its business by investing in alternative businesses with the potential to become Paramount's new core businesses.
Meanwhile, on another note, TA Research said Paramount's restructuring proposals announced on July 28 reflected prudent capital management, which would allow the company to preserve its strategic interest in its campus assets while deferring cash outflows.
However, the research house is keeping a neutral stance on the developments, citing a lack of material near-term earnings impact for Paramount.
Paramount announced a series of proposals revolving around Dynamic Gates Sdn Bhd (DGSB), a special-purpose vehicle that holds three university campuses – Glenmarie, Batu Kawan and George Town – which was acquired in a 2018 RM456mil securitisation deal.
DGSB remains consolidated into Paramount's financials.
A key component of the plan is the redemption of RM126mil in cumulative redeemable non-convertible preference shares (CRNCPS) issued by DGSB.
Instead of a cash settlement, Paramount will issue new perpetual redeemable preference shares (RPS), which offer only discretionary dividends and rank above ordinary shares in payout priority.
TA Research said the transaction 'avoids cash redemption, given the absence of distributable profits in DGSB.'
Additionally, Paramount plans to extend by seven years the CRNCPS subscription, master lease, and call/put option agreements to align with DGSB's proposed medium-term notes (MTN) extension.
These MTNs were originally raised to partially fund DGSB's RM294mil campus acquisition from Paramount.
Another notable change involves a repricing of the call and put options to reflect updated market valuations.
According to independent valuer Jones Lang Wootton, the Glenmarie campus is now worth RM281mil, Batu Kawan RM105mil and George Town RM70mil – bringing the total valuation of the assets back to RM456mil.
Furthermore, Paramount, through its subsidiary Janahasil, will extend the lease with DGSB by seven years.
Monthly lease payments will gradually rise from RM1.35mil to RM1.43mil, translating to a step-up in lease yield from 3.55% to 3.77%. The campuses will continue to be sub-leased to University of Wollongong Malaysia and its affiliates.
TA Research pointed out that the extension of the lease and option agreements enhanced long-term optionality and aligned with the extended MTN maturity, underscoring that Paramount is focused on preserving strategic flexibility while deferring cash outflows.
The securities firm sees potential upside in the proposals should Paramount provide more visibility on 'the future income contribution from the RPS and the group's broader asset monetisation and capital allocation plans'.
TA Research maintained its earnings forecasts for the financial years ending 2025 to 2027 and reiterated a 'buy' call with a target price of RM1.48 per share, representing a 36.7% upside from its last traded price of RM1.08.
The proposals are subject to shareholder approval at an upcoming emergency general meeting and are expected to be completed by the first quarter of 2026.