Jerneh Asia eyes Sabah developer

KUALA LUMPUR: After hiving off its core insurance business in Malaysia, cash-rich Jerneh Asia Bhd has now set its sights on acquiring Sabah-based property developer Sagajuta (Sabah) Sdn Bhd, whose flagship project is the massive 1Borneo mixed development in Kota Kinabalu.

Jerneh Asia announced to Bursa Malaysia on Thursday, Apr 21 that it had signed a memorandum of understanding (MoU) with Sagajuta's 60% shareholder, Generasi Cipta Sdn Bhd, to start exclusive discussions for the proposed acquisition.

If the talks bear fruit, it will be a backdoor listing of Generasi Cipta, whose main assets include the 1Borneo project that has a gross development value of RM1.2 billion, encompassing a 1.5 million sq ft shopping mall, four hotels and four condominium towers.

However, the value of the acquisition is not known.

In the announcement, Jerneh Asia said the proposed acquisition formed part of its regularisation plan pursuant to its PN16 and PN17 status. Also, it noted the talks would look into the prospective participation of Sagajuta's shareholders in Jerneh Asia's proposed restructuring scheme.

According to Jerneh Asia, the talks will also look into the possibility of a restricted offer for sale of shares in Jerneh Asia held by Sagajuta's shareholders and/or placement to be identified at a later date, following the proposed restructuring scheme.

Jerneh Asia, which is 36.5%-owned by tycoon Robert Kuok, has until Dec 1 this year to submit its regularisation plan for approval.

Sagajuta is part of the Ramajuta Group, which has various property development projects in Sabah, including the Warisan Square mixed development project in Kota Kinabalu.

Apart from Generasi Cipta, Sagajuta's substantial shareholders include Chu Li Tan (6.77%), the company's executive chairman and managing director Datuk Raymond Chan Boon Siew (8.71%), Bumivesa Sdn Bhd (3.76%) and Sagajuta director Tan Tiang Lai (2.96%), according to data from the Companies Commission of Malaysia (CCM).

For FY08 ended Dec 31, Sagajuta posted net profit of RM59.28 million and revenue of RM293.71 million. The private company then had liabilities of RM208 million and assets of RM343.2 million.

The 1Borneo project is a joint-venture between Sagajuta and the landowner, United Sabah Islamic Association, and co-developer Warisan Harta Sdn Bhd.

Generasi Cipta was incorporated in 2008 as a investment holding company, according to CCM information.

Generasi Cipta's shareholders are Anchor White Sdn Bhd (69.65%), Camaxcorp Sdn Bhd (11%), Bumivesa (9.4%) and Chen Siew Kim (5.92%). Chan and Tan are also listed as directors of Generasi Cipta.

The announcement by Jerneh Asia has also raised eyebrows given that the property development business is unrelated to its prior mainstay of insurance provision.

Investors had been expecting a bumper dividend from the proceeds of the sale of Jerneh Asia's 80% stake in Jerneh Insurance Bhd for RM523.2 million cash to ACE INA International Holdings last October.

The divestment of Jerneh Insurance boosted Jerneh Asia's cash pile by 46% to RM635.34 million, translating into gross cash per share of RM3.51.

However, Jerneh Asia recently denied a newspaper report on a possible dividend payout, noting that the proceeds from the Jerneh Insurance sale had been placed with a custodian.

The proceeds are not to be withdrawn except to acquire a new core business approved by the Securities Commission or for pro rata distributions to shareholders if the company fails to regularise its condition, Jerneh Asia added.

After the divestment of its local insurance businesses, Jerneh Asia still owns overseas insurance operations and a takaful operating licence here via its 31% stake in HSBC Amanah Takaful (M) Sdn Bhd.