KUALA LUMPUR (Sept 19): The big news this week was that Bandar Malaysia, the single largest city development in the region, is now ready to take off.
And as a result, Ekovest Bhd is in the limelight again and things may change for it.
According to a report by The Edge Malaysia, an “offer has been extended for Ekovest to acquire a 40% stake in IWH-CREC Sdn Bhd, held by Iskandar Waterfront Holdings Sdn Bhd (IWH), for a price tag of RM1.3 billion”. IWH-CREC has 60% in Bandar Malaysia, while 40% is held by the Ministry of Finance via TRX City Sdn Bhd.
IWH-CREC is a joint-venture between IWH and China state-owned enterprise, China Railway Engineering Corporation (CREC).
A corporate adviser told the weekly that the deal “could help Ekovest”, which “has seen a dwindling order book in the current environment”.
“Ekovest has one more year to finish the DUKE 3 [Duta-Ulu Kelang Expressway Phase 3] project, so it has about RM1 billion left in terms of order book. If you invest in the Bandar Malaysia project, the gross development value can last for 30 to 50 years,” she explained.
IWH executive vice-chairman Tan Sri Lim Kang Hoo was reported to have said earlier this week that the deal would benefit Ekovest in the long term as it would allow the company to take part in the mega project worth about RM140 billion.
Meanwhile, an analyst told the business publication that “funding is the immediate issue for Ekovest” and “it could not expect short-term earnings contribution from the deal”.
“Financiers might be doubtful about providing financing to whoever is involved in the project in this soft market environment,” he said.
“Even if they can secure financing, would the project be able to garner sufficient demand so that it can be translated into earnings?” he added.
Lim, however, said “internal funding, bank borrowings and cash calls are the options for Ekovest”.
Bandar Malaysia is expected to commence early next year, following the settlement of a RM1.24 billion payment due to Putrajaya by IWH-CREC.
It is planned to be “an intelligent city” with integrated components covering finance, technology, medical science, education, tourism and entrepreneurship, among others.
It will also host the terminus station for the Kuala Lumpur-Singapore High-Speed Rail.
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Read the full report in this week’s The Edge Malaysia