A SUBSIDIARY of Malaysia developer Aspen (Group) Holdings is investing RM5 million (S$1.65 million) in online food delivery platform Delivereat, the group said in a Singapore Exchange filing on Monday.
The group's wholly owned subsidiary Aspen Vision All (AV All) has entered into a subscription agreement for 138,750 convertible preference shares in Delivereat, with a tenure of five years. AV All will pay Delivereat the subscription price in two tranches of RM2.5 million each, subject to conditions including Delivereat achieving an agreed revenue milestone within 18 months from the date of the subscription agreement. The investment will be funded using internal resources.
The group said that the investment in Delivereat is an opportunity to diversify its business, which it noted is important in order to expand so as to reach long-range financial goals while mitigating risks.
On the issuance of the subscription shares to AV All and on the assumption that they are fully converted into ordinary shares, AV All will hold 31.62 per cent of Delivereat's issued share capital. If other existing preference shares held by existing shareholders are also fully converted into ordinary shares, and shares allocated for Delivereat's employees shares option plan are fully issued, AV All's share of Delivereat's issued share capital will be 25 per cent.
Delivereat was founded in 2012 in Penang, Malaysia, and has partnerships with more than 1,000 restaurants. It has also ventured into other delivery services including delivery of groceries, parcels, documents and e-commerce. Based on its latest available audited financial statements for the financial year ended Dec 31, 2018, Delivereat has a negative net asset value of RM1.84 million and negative net tangible asset value of RM1.96 million.
The investment is not expected to change Aspen (Group) Holdings' business risk profile, but in the event that it progresses to a stage that would result in a significant change to the business risk profile, the company will seek shareholder approval before entering such a stage, the group said.