By Khairie Hisyam
Eco World Development Group Berhad (Eco World) has announced an assets injection exercise worth RM30 billion in gross development value (GDV), more than tripling the group’s landbank to 4,433 acres.
In a regulatory filing today, Eco World said it is acquiring the development rights to eight projects from the subsidiaries of major shareholder Eco World Development Sdn Bhd (EWDSB), adding 3,107 acres to Eco World’s existing landbank of 1,326 acres and boosting the group’s current GDV from RM13.49 billion to RM43.53 billion.
As part of the injection, EWDSB’s shareholders — Eco World Development Holdings Sdn Bhd (Eco World Holdings) and Sinarmas Harta, which own 50% each — will subscribe to 806.85 million new Eco World shares worth RM1.37 billion to partially fund the acquisition by Eco World.
As at end-March, the directors of EWDSB are non-executive chairman Abdul Rashid Abdul Manaf, non-executive deputy chairman Leong Kok Wah and executive director Liew Tian Xiong.
However the shares subscription is conditional upon relevant regulatory approvals including an exemption from the Securities Commission as Eco World Holdings would see its current 30% stake rise to 42.3% after the shares subscription, triggering a mandatory general offer (MGO).
“The Proposed MGO exemption will be sought from the SC and shareholders of Eco World as it is not the intention of Eco World Holdings to undertake a take-over offer for all the remaining Eco World shares not already held by Eco World Holdings and its persons acting in concert as a result of the proposed share subscription,” said Eco World in a regulatory filing.
The assets injection completes the transformation of formerly little-known developer Focal Aims Holdings Berhad into a leading developer in Eco World after its reverse take-over by EWDSB (formerly known as Maple Quay Sdn. Bhd) and Liew Tian Xiong last September in a deal worth RM230.7 million.
After the takeover was completed, Focal Aims was renamed as Eco World Development Group with a new board comprising former SP Setia strongmen. Notably, Liew Tian Xiong’s part in the take-over was financed by his father Liew Kee Sin, who is departing developer SP Setia at the end of this month after 18 years in the hotseat.
This sparked talk of whether the elder Liew is conflicted between his position at the helm of SP Setia and his part in Eco World’s manoeuvres, especially given market speculation that Eco World is Liew’s personal vehicle as a fresh start after leaving SP Setia.
However, when pressed by KiniBiz in September Liew said: “I want to retire, enough of work!”
KiniBiz previously examined Eco World’s rapid emergence in a three-part series here.
Shareholding changes after RM788-million rights issue
Following the acquisition and shares subscription, Eco World is planning a renounceable rights issue with new free detachable warrants to raise about RM788 million along with a private placement of new Eco World shares of up to 20% of its share base after the share subscription and rights issue.
The coming cash call comes alongside splitting each existing RM1.00 share into two 50 sen shares as well as a proposed amendment of the company’s memorandum and articles of association to change its shares’ par value and increase its authorised share capital.
After the dust settles following the shares subscription, private placement and rights issue with warrants, Eco World Holdings, which currently holds 30% of Eco World, will end up with 42.3%, taking into account that prior to implementing the proposals, Eco World Holdings intend to sell up to 10% of its stake in Eco World to non-related third parties, according to the company’s filing on Bursa Malaysia.
Sinarmas Harta would emerge as a substantial shareholder with 30.7% while executive director Liew Tian Xiong will see his direct shareholding reduced to 13.52% from the current 35%.
Along with the projects, the exercise also involves Eco World acquiring two wholly owned units of EWDSB — Eco World Project Management Sdn Bhd and Eco Macalister Development Sdn Bhd — which provides the company “a development team with the expertise and proven capability to create and deliver highly sought after development projects”.
“EcoWorld Berhad will gain an immediate enlarged and active presence in all three key development regions of Malaysia namely the Klang Valley, Iskandar Malaysia and Penang,” said Eco World in a statement on the exercise.
Eyeing RM5 billion sales in two years
Eco World is now setting its sights on some RM5 billion in sales over the next two financial years as the assets injection sets the stage for explosive growth over the next few years, said Eco World president and chief executive officer Chang Khim Wah.
Of that figure, the company is targeting RM2 billion in sales for FY14 and another RM3 billion for FY15.
“Now that all the development projects of the unlisted entity have been integrated into the listed entity, we can focus our full attention to make EcoWorld Berhad one of Malaysia’s top property developers,” said Chang.
Following the injection, Eco World’s pipeline will grow from three to 11 projects, all of which are planned for launches in quick succession within the next one to two years, said Eco World.
Prior to the injection, Eco World — formerly known as Focal Aims Holdings Berhad prior to the reverse take-over last September by former SP Setia bigwigs — only ongoing project was the 991.6-acre Kota Masai township in Iskandar Malaysia.
The company recently revised the township’s development masterplan to create two separate developments. As a result it now has a township component, Eco Tropics, as well as a green business park, Eco Business Park III.
To-date, Eco World has launched EcoSky in Klang Valley and EcoBotanic in Iskandar Malaysia, gaining RM1.13 billion in sales as at end-March.
These will be followed shortly by EcoMajestic in the Klang Valley, EcoSpring and Eco Business Park I in Iskandar Malaysia and Eco Terraces in Penang which will be launched soon, said Chang.
“With another five projects still to be unveiled, namely EcoSanctuary in the Klang Valley, the newly revamped EcoTropics, Eco Business Park II and Eco Business Park III in Iskandar, as well as EcoMeadows on mainland Penang, the group will be kept very busy over the next few years,” said Chang.
Eco World shares are still suspended until 5.00pm today.
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