Paragon Globe proposes RM141.1 mil Sedenak land acquisition for RM1.69 bil industrial park plan

PETALING JAYA (July 15): Paragon Globe Bhd (PGB), via its wholly owned subsidiary PGB Gardens Sdn Bhd (PGSB), has proposed to acquire a combined 841/1,000 undivided beneficial interest in a freehold land parcel in Sedenak, Kulai, Johor for RM141.14 million, as the group explores an integrated industrial park development with an estimated gross development value (GDV) of RM1.69 billion.

Acquisition to consolidate 841/1,000 beneficial interest in Sedenak land

In a filing with Bursa Malaysia yesterday, PGB said PGSB had entered into 29 conditional sale and purchase agreements (SPAs) with 35 beneficial owners to acquire a 753/1,000 undivided share of beneficial interests in the land for RM127.28 million cash.

The proposed acquisition will be aggregated with an earlier acquisition completed on July 8, 2026 involving an 88/1,000 undivided share in the same land parcel for RM13.86 million, as both transactions involve beneficial interests in the same Master Land within a 12-month period.

Upon completion of the proposed acquisition, PGSB will hold an aggregate 841/1,000 undivided beneficial interest in the Master Land.

The Master Land, held under Geran 238199, Lot 1317, Mukim of Sedenak, District of Kulai, Johor, measures approximately 103.90 hectares or 11.18 million sq ft.

The combined beneficial interests acquired and proposed to be acquired represent approximately 9.50 million sq ft of the land.

Sedenak site located within JS-SEZ Kulai-Sedenak zone

The land is located off the Kulai-Sedenak main road, approximately 8km west of Kulai town and 40km northwest of Johor Bahru city centre.

It is situated within the Kulai-Sedenak flagship zone of the Johor-Singapore Special Economic Zone (JS-SEZ), between Flagship E (Senai-Skudai) and Flagship F (Sedenak).

PGB said the land acquisitions are aligned with the group’s strategy to expand its strategic land bank and strengthen its future development pipeline.

Proposal to comprise factories, commercial units and workers’ hostel

Subject to the required approvals, PGB intends to explore the development of the land areas attributable to its beneficial interests into an integrated industrial park comprising industrial factory units, commercial units and a workers’ hostel.

Based on the group’s preliminary development concept, the industrial and commercial components are expected to be developed over approximately eight years, with an estimated GDV of RM1.69 billion and gross development costs (GDC) of RM1.26 billion, implying an estimated gross development profit of approximately RM430 million.

The proposed workers’ hostel is envisaged to comprise 360 accommodation units with an estimated capacity of up to 5,400 workers. PGB estimates the hostel could generate gross revenue of approximately RM130 million over its first 10 years of operations, based on an assumed occupancy rate of 80% and other preliminary assumptions.

However, PGB noted that no land conversion approval, planning permission or development approval has been obtained for the proposed development as at the announcement date.

The group said it has yet to formalise any development plan or appoint professionals or experts in relation to the intended development of the land.

“The final development components, development costs, development timeline, funding requirements and estimated returns will be determined at a later stage,” PGB said, taking into account the required approvals, detailed development plans, funding structure, market demand and prevailing economic conditions.

Acquisition priced below valuation, funding mix to be determined

Independent valuer CBRE WTW Valuation Advisory Sdn Bhd appraised the market value of the 753/1,000 beneficial interest proposed to be acquired at RM136 million as at June 26, 2026.

The proposed acquisition consideration of RM127.28 million represents a discount of approximately RM8.72 million or 6.41% to the appraised market value.

PGB said the earlier acquisition completed on July 8, 2026 was fully funded through internally generated funds.

The proposed acquisition will be funded through a combination of bank borrowings and/or internally generated funds, with the final funding mix to be determined after considering factors including gearing levels, interest costs and cash reserves.

Based on a pro forma illustration assuming approximately 80% of the acquisition consideration is funded through bank borrowings, PGB’s gearing ratio would increase from 0.73 times to 0.98 times.

The land acquisitions will not affect PGB’s issued share capital or substantial shareholders’ shareholdings as no new shares will be issued.

Completion subject to approvals and remaining land consolidation

The proposed acquisition remains subject to shareholders’ approval at an extraordinary general meeting and fulfilment and/or waiver of conditions precedent under the conditional SPAs.

These conditions include requirements relating to the acquisition of sufficient beneficial interests in the Master Land, resolution of ongoing legal proceedings involving the land, removal of relevant caveats, procurement of the issue document of title and approvals from the relevant authorities.

PGB also said PGSB intends to continue negotiations with beneficial owners of the remaining 159/1,000 undivided beneficial interest in the Master Land.

However, there is no assurance that these negotiations will be successful or that further acquisitions will materialise.

If PGSB is unable to acquire all or part of the remaining interests, PGB said it will evaluate its development strategy for the Master Land, including the scope, timing and implementation of the proposed development, taking into consideration commercial, legal and regulatory requirements.

Key risks: Title, litigation and approvals

PGB is acquiring beneficial interests in the Master Land rather than the registered title. The land is subject to private caveats and ongoing legal proceedings involving the vendors and third parties, which could affect the completion of the proposed acquisition and the group’s ability to implement its plans for the site.

The proposed acquisition is also conditional upon the fulfilment and/or waiver of various conditions precedent. Failure to satisfy these conditions within the stipulated timeframe may delay or prevent completion of the transaction.

In addition, the land is currently categorised for agricultural use with rubber plantation conditions, and no land conversion approval, planning permission or development approval has been obtained for the proposed industrial park. The final development plans, timeline and returns remain subject to regulatory approvals, market conditions and other considerations.

PGB has also identified potential risks arising from interest rate exposure, property market conditions and possible compulsory acquisition under the Land Acquisition Act 1960, which could affect the group’s ability to realise the expected benefits from the land acquisitions.

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