KUALA LUMPUR (June 27): Velocity Capital Partner Bhd (KL:VELOCITY) is selling an 85% stake in Cipta X Sdn Bhd, an information technology firm, to MMAG Holdings Bhd (KL:MMAG) for RM20 million in cash, according to filing with Bursa Malaysia.

The remaining 15% stake in Cipta X, formerly known as Solutions Sdn Bhd, is held by Lai Kwok Ching, who bought the stake from Green Packet Bhd (KL:GPACKET) on Jan 24 for RM3.5 million.

Meanwhile, cash-rich 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.

According to its 2023 annual report, Datuk Liu Han Ming, through Sheng Dar Holding Sdn Bhd is Velocity's largest shareholder with a 16.61% stake, followed by Tan Yip Jiun, through ChipSeng Heng Holdings Sdn Bhd with a 12.17% stake.

Before CSH Alliance, the company’s former names were KTG Bhd, DWL Resources Bhd, Spring Gallery Bhd, PFCE Bhd and App Industries Bhd. The last time the company changed its name was on Dec 28, 2023.

“Given uncertainties and challenges surrounding Cipta X’s profitability and the likelihood of securing additional new customers, as well as the need for additional funding and resources for its ongoing operations, the board is of the view that it is in the best interest of Velocity to dispose of Cipta X in order to mitigate the business risk," Velocity said in a bourse filing.

Velocity added that the proposed disposal provides "a timely opportunity" for the group to unlock and realise the value of its investment and assets in Cipta X. The estimated gain on disposal is approximately RM3.97 million.

Proceeds from the proposed disposal will be reallocated to fund the group’s existing businesses, future expansions and any prospective ventures. The divestment aims to improve the group’s cash flow position and reduce dependence on bank borrowing, it said.

Subject to the terms and conditions of the agreement, the proposed disposal is expected to be completed in the third quarter.

Shares in Velocity went up 0.5 sen to close at 5.5 sen on Thursday, valuing the company at RM75.98 million. MMAG was unchanged at 31 sen giving it a market capitalisation of RM617.92 million.

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Green Packet disposes of 15% stake in CSH Solutions for RM3.5m

MMAG divests entire holdings of shares, warrants in CSH Alliance for RM37.36m