Share
KUALA LUMPUR (April 14): S P Setia Bhd, Permodalan Nasional Bhd (PNB) and Amanahraya Trustees Bhd (as trustee for Amanah Saham Bumiputera) have entered into a non-binding Memorandum of Intent to commence negotiations on the proposed acquisition of I&P Group Sdn Bhd by S P Setia.
If the acquisition is realised, S P Setia will become the third largest property developer by landbank in Malaysia, just behind Sime Darby Property (28,000 acres) and UEM Sunrise Bhd (13,000 acres), S P Setia president and CEO Datuk Khor Chap Jen told reporters after the signing ceremony today.
The indicative price for the acquisition of the entire equity interest in I&P Group from its substantial shareholder PNB is estimated to be about RM3.5 billion to RM3.75 billion,
However, the final purchase price will only be determined and agreed upon taking into consideration the necessary due diligence results, the audited net asset value of I&P Group which as at end-2016 was RM3.16 billion, and the market value of all the landbank, on-going projects and investment properties of I&P Group as appraised by the independent property valuers to be appointed by S P Setia.
The signing ceremony was witnessed by PNB group chairman Tan Sri Abdul Wahid Omar and president and group chief executive Datuk Abdul Rahman Ahmad. Abdul Rahman said the merger of the two companies will create one of the largest property companies in Malaysia. I&P has an undeveloped landbank of 4,263 acres.
The combined landbank of S P Setia and I&P Group will be around 9,481 acres with an estimated gross development value of about RM122 billion.
The enlarged group will also be poised to have a revenue of about RM5 billion, with S P Setia and I&P Group currently generating RM4 billion and RM1 billion in revenue, respectively.
Khor said the consolidation period for S P Setia is over and the property developer has set a five-year strategic plan to boost its current market capitalization of about RM10 billion to RM18 billion by 2021 and become one of the component stocks in the FTSE Bursa Malaysia KLCI Index.
“Acquiring I&P Group is more than just landbanking. We see a lot more synergistic opportunities with the company as it owns more than 4,200 of prime lands in the Klang Valley and Johor,” he said.
Some of the lands under I&P Group are located in places where S P Setia currently has no presence in so it could give the latter an opportunity to venture into new markets, such as Kinrara and the Southern parts of Klang, Khor explained.
In addition, I&P Group has a light balance sheet with very low debt level, so it will be an excellent platform to support S P Setia’s future financing for growth, he said.
“We have 1,800 staff now but it is not enough for us to carry out our plans and advance into a higher level, so I&P Group will also provide immediate access to a ready talent pool for our expansion plan.” Khor noted.
