Eco World to propose rights issue, asset acquisitions

KUALA LUMPUR: Eco World Development Group Bhd is likely to propose a major rights issue and the acquisition of property assets worth about RM2 billion from private vehicles controlled by its major shareholders today, said sources.

Touted as the next flagship of S P Setia Bhd’s former head honcho Tan Sri Liew Kee Sin, Eco World suspended the trading of its stock from yesterday afternoon, pending an announcement today. Its shares were last traded at RM5.40, giving the property company a market capitalisation of RM1.37 billion.

Sources told The Edge Financial Daily yesterday that the proposed rights issue could be “huge”, given the potential size of the assets and property projects to be acquired or injected into the company.

As the proposal will largely involve related party transactions, the major shareholders, who will be subscribing to their entitlement of the rights issue, will also receive proceeds from the sale of the assets to Eco World.

The major shareholders of Eco World are Liew’s son, Tian Xiong, with a direct stake of 35.05%, and Eco World Development Holdings Sdn Bhd with a direct stake of 30.01%. The latter is a vehicle owned by S P Setia’s former chairman Tan Sri Abdul Rashid Abdul Manaf and Liew’s long-time associate Datuk Eddy Leong Kok Wah.

Tian Xiong is Eco World’s executive director while Abdul Rashid is a non-executive chairman and Leong, a deputy non-executive chairman.

The trio took over Eco World, formerly known as Focal Aims Holdings Bhd, late last year after paying RM1.40 per share or a total of RM230.7 million for the 65.06% stake. As Focal Aims was a small developer, it was largely anticipated then that the new owners would subsequently inject landbank and property projects into the listed company to enlarge its asset base.

Including its latest purchase of 128.93ha of the former Canal City land for RM470.7 million from Tropicana Corp Bhd last month, the privately-held Eco World Development Group has accumulated some 1,342ha of land in the Klang Valley, Johor and Penang with a potential total gross development value (GDV) of RM38 billion.

The injection of these assets or property projects into the listed Eco World is expected to bump up the company’s asset base significantly.

As at Dec 31, 2013, Eco World’s total assets stood at RM475.18 million, with the bulk of them in the form of development landbank (401.29ha in Plentong, Johor Baru) worth RM299.69 million, and property development costs and inventories of RM121.1 million. Its shareholders’ fund stood at RM319.51 million.

Meanwhile, Liew’s official last day as president and chief executive officer (CEO) of S P Setia is April 30. He has been the CEO for 18 years. A few days ago, he exercised a put option and sold his remaining 2.75% stake in S P Setia to Permodalan Nasional Bhd.

This article first appeared in The Edge Financial Daily, on April 25, 2014.


Looking for properties to buy or rent? With >150,000 exclusive listings, including undervalued properties, from vetted Pro Agents, you can now easily find the right property on Malaysia's leading property portal EdgeProp! You can also get free past transacted data and use our proprietary Edge Reference Price tool, to make an informed purchase.