Who really controls Eco World?

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Billionaire Syed Mokhtar Albukhary,  former finance minister Daim Zainuddin and former head honcho of SP Setia are said to be among those who may be pulling the strings behind the curtain.

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As Eco World Development Holdings Bhd (ECO World) shares’ spectacular free-fall since late April appears to have slowed down — it finished 4 sen lower to RM4.56  yesterday — the question that still burns is who really controls the developer.

Among the names the market throws up are well-known multi-billionaire Syed Mokhtar Albukhary former finance minister Daim Zainuddin and former SP Setia head honcho Liew Kee Sin or some combination of all of them. Daim denies his involvement while the others can’t be contacted.

While the same group of three shareholders will still control the company, there will be significant shifts in their stakes. Currently control of fast-emerging developer Eco World appears to rest with major shareholders Liew Tian Xiong (Liew Kee Sin’s son), Abdul Rashid Abdul Manaf and Eddy Leong Kok Wah – chairman and deputy chairman respectively of Eco World. Presently the trio collectively have a 65% stake in the company.

Abdul Rashid was previously chairman of SP Setia for 15 years since 1997 to 2012 and Leong deputy chairman when Liew Kee Sin was CEO and a major shareholder of the same company. They are therefore very close associates of Liew Kee Sin. Leong left SP Setia in 2013  and Abdul Rashid  a year earlier, the duo emerging in  Eco World where they occupy identical positions.

Liew Kee Sin tendered his resignation from SP Setia in January and his last day with the company was April 30. He joined the Eco World board as non-executive director on May 5. It is estimated that some 280 staff of SP Setia have now joined Eco World, most of them at the senior level, including Eco World’s current CEO Chang Kim Wah. This probably marks an unprecedented mass migration from one property company to another in Malaysia.

“Sometimes you even see Eco World’s cleaning ladies wearing SP Setia shirts,” joked one corporate observer to KiniBiz some time back.

Currently Liew Tian Xiong is the biggest shareholder of Eco World with a direct stake of 35.05% while Abdul Rashid and Leong indirectly control 30.01% via their shareholding in Eco World Development Sdn Bhd (EWDSB).

However with the corporate exercises announced on April 25, 2014, which involves assets injection, shares and rights issue as well as a coming private placement, Tian Xiong is set to see his stake dilute to 11.27%. However, he will continue as executive director.

The control post the deals shifts to Abdul Rashid and Leong who would jointly own a 35.24% block through their 85:15 shareholding in Eco World Development Holdings Sdn Bhd (Eco World Holdings) while Leong will own an additional 26.53% stake.

The separate block of 26.53% comes through Sinarmas Harta Sdn Bhd, which he controls through 99.99%-owned Syabas Tropikal Sdn Bhd. Therefore Leong would emerge as the single largest interested party in Eco World with a cumulative 61.77% in direct and indirect holdings.

But industry observers consider it unlikely that Abdul Rashid and Leong are acting on their own. Which leaves the question of who really runs the show at Eco World? Whoever that may be who has control, they feel that Liew Kee Sin will exert vital influence over how Eco World is run even if he is a non-executive director. After all son Tian Xiong is an executive director.

The truth may lie deeper in the shadows, with many questions unanswered over who is really behind the curtains of power at the helm of what must be the fastest-rising property development company in Corporate Malaysia’s recent history.

SP Setia-inherited link to Syed Mokhtar?

In a three-part series by KiniBiz last September exploring the rapid emergence of Eco World, several developers KiniBiz spoke to said there is much talk saying businessman Syed Mokhtar Albukhary is involved with the property outfit.

The big news this week was the entry of Liew Kee Sin into Eco World’s board on Monday, following months of speculation on his link to Eco World which he had continuously denied.

Albeit entering as a non-executive director, the presence of Liew senior in addition to the army of former SP Setia staff in Eco World is significant as, under Liew’s stewardship for nearly 18 years, SP Setia has had a long history of partnership with Syed Mokhtar.

“These days they say every deal around is said to be linked to Syed Mokhtar,” said one of his associates last year when KiniBiz queried on similar speculation.

However KiniBiz was unable to reach Syed Mokhtar immediately.

Among the dealings that can be traced between them are a 1999 land purchase of 888.47 acres in Johor by SP Setia from Syed Mokhtar’s Kelana Ventures Sdn Bhd for RM11.06 million; SP Setia’s 50:50 partnership with Syed Mokhtar’s flagship Tradewinds to develop affordable housing under the 1Malaysia People’s Housing Programme (PR1MA) in Taman Ikan Emas, Cheras; and another partnership with Mekar Gemilang Sdn Bhd, another Syed Mokhtar company, to develop a prime land parcel in Bangsar.

Most interesting, however, is a 613.79-acre land parcel in Johor which Eco World bought for RM534.7 million in April 2013. The seller was Syed Mokhtar’s DRB Hicom Bhd, but the intrigue extends further — the parcel was part of the Stamford Holdings Sdn Bhd land in the Stamford Land case.

The case goes back to the late 1980s when current Deputy Prime Minister Muhyiddin Yassin was Johor Mentri Besar.

While initially Stamford Holdings Sdn Bhd was partnering Syed Mokhtar in a 70:30 JV to develop the Stamford land into a light industrial area, eventually Syed Mokhtar’s party sought to buy out Stamford Holdings at below-par price, leading to alleged intervention by Muhyiddin threatening to forcibly acquire the land with state powers, according to foreign news reports.

After a colourful history over the years, 6,882.30 acres of the Stamford land eventually ended up with DRB Hicom in December 2008 for RM722.5 million, of which 613.79 acres was later sold to Eco World.

Is Eco World simply Liew’s vehicle?

However another corporate source KiniBiz spoke to recently, disputed the link to Syed Mokhtar, asserting that Eco World is simply the new vehicle of Liew Kee Sin, former SP Setia chief of nearly 18 years and Tian Xiong’s father, without anyone standing behind him pulling the strings.

What appears strange here though is the fact that control over the company will slip from Tian Xiong — and by extension Liew senior — to Abdul Rashid and Leong, as examined earlier in this article.

“Tian Xiong doesn’t have shares in the assets to be injected, therefore his stake will be diluted through the corporate exercises,” said an analyst to KiniBiz.

To recap, apart from Tian Xiong’s direct 35.05% stake (financed by father Liew Kee Sin and his wife according to a Bursa Malaysia disclosure) at present, Abdul Rashid and Leong, through their shareholding in Eco World’s major shareholder Eco World Development Sdn Bhd (EWDSB), hold a 30.01% block.

Through the exercises, EWDSB is injecting assets with some RM30 billion in gross development value (GDV) into the company, more than tripling Eco World’s land bank from 1,326 acres to 4,433 acres and boosting the group’s current GDV from RM13.49 billion to RM43.53 billion.

In turn EWDSB ‘s 50:50 shareholders — Eco World Development Holdings Sdn Bhd (Eco World Holdings) and Sinarmas Harta Sdn Bhd — will subscribe to 806.85 million new Eco World shares worth RM1.37 billion to partially fund Eco World’s assets acquisition from EWDSB.

In addition a share split is also coming as well as a private placement of up to up to 20% of Eco World’s shares base, although Eco World Holdings plans to sell 10% of Eco World shares to an unrelated third party before any of these proposals take place.

Again the question mark here is whether Abdul Rashid and Leong are holding their shares personally or in trust for another party.

KiniBiz has contacted Leong on whether he is holding the shares in his personal capacity and is awaiting his response as he is currently overseas. However KiniBiz was unable to immediately contact Abdul Rashid on the same question.

When contacted an Eco World representative informed KiniBiz that they are not authorised to comment on behalf of shareholders and are not able to relay the questions to either Abdul Rashid or Leong despite them being board members.

Daim: No connection to Eco World

One link that has emerged leads to former finance minister Daim Zainuddin, to whom Abdul Rashid — who was Daim’s lawyer — had often been linked to  as well as to Halim Saad of the UEM-Renong fame, known as Daim’s protege from the Peremba days.

When Eco World Development Sdn Bhd moved for then-Focal Aims Holdings Bhd last September in a reverse-takeover (RTO), corporate observers took notice that Focal Aims chairman at the time was Mohd Razali Abdul Rahman, who among others was linked to Peremba and Landmarks, two entities said to be linked to Daim.

Additionally post all the exercises another Peremba-linked person, Hassan Che Abas, is set to emerge with 7.8% equity. Hassan is, among others, deputy chairman of Peremba and is an associate of Mohd Razali — foreign media reports say they together control Irish oil and gas provider Kentz through Mohd Razali’s holding company Kerbet.

Daim was Peremba’s first chairman when it was formed in 1976. In an exclusive interview with KiniBiz earlier this year, Daim said he suggested Peremba be formed to hold all of Urban Development Authority (UDA)’s commercial properties and assets.

However Daim has denied to KiniBiz that he is linked to Eco World through Abdul Rashid, saying that he “has not been in touch with Rashid nor Rashid with him” over the years.

In a letter to KiniBiz in March this year, Daim denied media links of various corporate personalities to him, saying: “In my three quarters of a century old age, there are many people I know, dealt with, helped along and some I am still friends with today and some I have lost contact with.”

As for Hassan, an Eco World official said he had always been an investor in the company since Focal Aims days.

If not a nominee shareholder, does Abdul Rashid, a former lawyer, have the financial means to acquire shareholding in Eco World on his own?

A corporate source told KiniBiz that Abdul Rashid does have some money of his own and that it would not be unimaginable for him to undertake such an investment into Eco World involving a multi-million ringgit outlay.

As for Leong, apart from his 15% share of the 35.24% block, he also controls 26.53% through Sinarmas Harta Sdn Bhd, which he wholly owns through Syabas Tropikal Sdn Bhd in which he has 99.99%, according to Eco World’s regulatory filings.

Leong is also a director of Salcon Berhad with some 13.17% interest — mostly indirect — in Salcon as of July 4, 2013 but recent regulatory filings last month showed that he no longer has any interests in Salcon, a water and wastewater solutions provider.

‘It’s probably just Liew’

However a corporate insider told KiniBiz that in all likelihood Eco World is simply Liew Kee Sin’s second vehicle, arguing that Abdul Rashid and Leong are perhaps closer to Liew than any other corporate figure.

Despite the myriad speculation, the source said Abdul Rashid has had a long history with Liew — being chairman of SP Setia for 15 years since 1997, coinciding with most of Liew’s stewardship which began in 1996 — while Leong had spent eight years with SP Setia between 2005 and 2013.

“Abdul Rashid has been with Liew for many years, playing a role in SP Setia’s first big break,” said the source to KiniBiz, adding “so it is likely that it’s as simple as Liew asking Abdul Rashid to join him one more time after SP Setia”.

On top of the senior management largely comprising former SP Setia bigwigs, RHB Research recently estimated that some 80% of Eco World’s current workforce of about 350 staff came from SP Setia.

Notably an analyst told KiniBiz last year that Tian Xiong, even before the RTO exercise last September, had regularly accompanied his father to SP Setia’s analyst briefings as Liew senior wanted to groom him into a developer, a fact the man had previously gone on record as saying.

“While I doubt that all of the links to Daim are untrue (as Daim claims), some are probably just speculation, as in this case,” said the source to KiniBiz, acknowledging that links to Syed Mokhtar are perhaps over-speculated in Corporate Malaysia.

Therefore it is likely that if Abdul Rashid and Leong are acting on someone’s behalf, that person would be Liew Kee Sin, added the source.

However Liew Kee Sin had not responded to a query by KiniBiz on that matter at press time.