KAWAN Food Bhd announced that its wholly-owned subsidiary, KG Pastry Marketing Sdn Bhd (KGPM), has entered into a joint venture focused on the information technology (IT) sector, specifically the supply and distribution of IT equipment.

The joint venture is established through a special purpose vehicle (SPV), Reka Innotech Sdn Bhd (REKA), which will acquire Regaltech Automation Sdn Bhd (RA) for RM2.5 million.

The joint venture parties include Sun Cheng Leng, who will assume the role of CEO of REKA, and Huang Er-Wen, Gan Thiam Chai, and Lim Hun Soon @ David Lim, who will take on key roles in the company.

KGPM will provide financial support, securing banking facilities, and subscribing to RM25 million worth of preference shares in REKA.

The new venture aims to capitalize on RA’s extensive experience in engineering services and industrial automation, alongside its recent agency and distributorship agreement with Super Micro Computer, Inc.

REKA plans to expand into the IT equipment sector, a business previously managed by RA under the leadership of Sun Cheng Leng.

The joint venture is expected to be completed by the first quarter of 2025, with funding sourced from the parties’ internally generated funds.

Kawan Food Bhd views this venture as an opportunity to diversify its business portfolio.

While the joint venture is not expected to significantly affect the company’s financial performance for the 2023 fiscal year, Kawan’s board of directors believes the partnership is in the company’s best interest.

Chairman Emeritus of Kawan, TC Gan, is deemed interested in the joint venture due to his substantial shareholdings in GFG (L) Foundation and his directorship at REKA, while Kawan’s non-independent non-executive chairman, David Lim, is also a director of REKA.

Apart from these interests, no other directors or major shareholders of Kawan have a direct or indirect interest in the joint venture. –TMR