Jade Marvel Group Bhd, formerly JMR Conglomeration Bhd, publicly traded, was a Penang-based real estate developer and asphalt manufacturer. Following the emergence of new shareholders and a reshuffle of the board of directors over the past 12 months, it is changing course to become a business incubator and money lender.
Deputy Managing Director (MD) Datuk David Khoo Yik Chou said Jade Marvel was not particularly keen on investing in start-ups the venture capital (VC) way. The ideal of the group is rather profitable local businesses that have good growth potential but face obstacles to develop their activities.
“Of course, there are a lot of similarities between VC, private equity (PE) and incubators like us. Our unique proposition is that we not only operate as a business incubator, but we also offer money lending services to incubates, ”Khoo told The Edge in an interview.
He observes that many companies with heavy assets were weighed down during the Covid-19 pandemic but, at the same time, many have growth potential.
“This is why we intend to make Jade Marvel an investment holding company and a business incubator. We want to provide potential incubates with technological, financial and marketing support. Our ultimate goal is not only to help them start their performance, but also to help them get listed on the stock market, ”he explains.
Khoo, 34, was appointed executive director of Jade Marvel in April, before being reassigned to his current role in June. He started his professional career in 2010 as an associate auditor at KPMG, involved in internal and external audits for companies.
Expansion of the incubator portfolio
Jade Marvel currently has two incubators: in the cash lending business and in the frozen seafood business. Deputy General Manager Dennis Chung Vui Ming believes that the two companies have good potential for accelerated registrations.
Interestingly, in its money lending business, Jade Marvel collaborates with Sri Guan Teik Credit Sdn Bhd, a leading money lender and pawnshop in the Northern region.
“The beauty of our business model is that when we invest in our incubates, we can also lend them money. This means that we collect interest on the loan every month. In other words, if ever our investments go badly, at least our interest income could partially cover the losses, whereas for other investors, whether they are VC, PE or PLC, when they make a unsuccessful stock investment, they would have zero return, ”says Chung.
Earlier this month, Jade Marvel signed a shareholders agreement with YHL Foods Sdn Bhd (YHLF), to create a joint venture (JV) called YHL Jadem Frozen Sdn Bhd (YHLJF) to provide processing related services frozen seafood and cold storage facilities. as well as sales. Under the agreement, Jade Marvel will own 60% of YHLJF and YHLF 40%.
Chung says the joint venture represents a strategic opportunity for Jade Marvel to expand the group’s business into the frozen seafood segment and provide an additional revenue stream.
For the next incubator, Jade Marvel might consider a food distribution and logistics company. In fact, says Chung, the group is already in negotiations with potential targets that could bring synergistic value to YHLJF.
“You can imagine that YHLJF could partner with our next incubator and that they could complement each other in the future. From our observation, the food industry is one of the very few industries not to be hit hard by the pandemic. It is a very resilient company. We believe that the food market will only grow because there is increasing demand and a shortage of supply, ”says Chung, 59.
Chung was appointed Executive Director of Jade Marvel in March 2018, then re-appointed as Group Managing Director in February 2019 and Deputy Managing Director in June 2021.
Director Vincent Chong Wei Liang points out that Jade Marvel’s net cash position stands at RM21 million, of which RM15-16 million has been allocated as a war chest for the incubator.
“Subject to regulatory approvals and depending on the performance of our stock price, we plan to undertake another corporate year to raise an additional RM 55-60 million next year,” he said. .
Vincent, 37, has 10 years of management experience in business training, team management, coaching and developing business development strategies. He is the brother of Datuk Seri Chong Wei Chuan, vice president, executive director and significant shareholder of Jade Marvel.
Vincent acknowledges that according to the rules of Bursa Malaysia, a public limited company is not allowed to raise funds from a business year without a specific use. And given her limited resources, Jade Marvel needs to be selective in choosing incubator projects.
“We need to identify the right incubator even before entering capital markets. In fact, a memorandum of understanding does not count. We need to sign the actual agreements so that we can report the use of the revenue. The regulator has been very strict about this, ”he said.
In the long run, Vincent says, assuming Jade Marvel successfully raises an additional RM 55-60million next year, the group hopes to have at least five to eight incubated in its diverse portfolio.
“We will try to find companies that can complement our existing incubators, so that we can add value to those companies, but we don’t expect the five to eight of them to synergize with each other. others, ”he adds.
X Infinity Group Bhd, a financial technology company involved in blockchain and digital wallet business, owns nearly 10% of Jade Marvel. X Infinity is ultimately controlled by Wei Chuan. Global Legacy Partners Sdn Bhd, controlled by Hong Kong fund Legacy Trust Company Ltd, is Jade Marvel’s largest shareholder, with a 15.5% stake.
So far this year, shares of Jade Marvel have fallen 33% to close at 67 sen last Wednesday, giving it a market cap of RM 215.75 million.
The group returned to black with a net profit of RM 4.25 million in the fiscal year ended March 31, 2021, compared to a net loss of RM 7.12 million a year ago. The turnaround was mainly attributed to a better performance of its real estate development division, due to the recognition of revenues from a JV project in Simpang Ampat.