Liew continues to helm S P Setia

KUALA LUMPUR: S P Setia Bhd's Tan Sri Liew Kee Sin will continue to lead the company as CEO, according to a joint statement issued by Permodalan Nasional Bhd (PNB) and the property developer on Monday, Oct 10.

The joint statement, in relation to PNB's takeover of S P Setia, said the existing management team of S P Setia will also continue to manage the company.

It stated that PNB president and group chief executive Tan Sri Hamad Kama Piah Che Othman had met with Liew last Friday to personally reassure him of PNB's best intentions for S P Setia which were reported in the press.

"Tan Sri Liew will continue to lead S P Setia Bhd as its CEO. The existing management team will also continue to manage the company with the same high professional standards and spirit of excellence which have caused S P Setia to be voted the No 1 developer in Malaysia time and again," the joint statement said.

Analysts and market observers welcomed the statement, ending speculation over PNB's intentions, the direction of S P Setia and the role by Liew and his team. "S P Setia is Liew and Liew is S P Setia," a market observer said. "Without Liew, PNB will be buying more land, rather than a brand," he added.

They also noted that the meeting between Hamad Kama Piah and Liew took place nine days after PNB initiated its takeover offer on Sept 28, while on Monday's press release came 12 days later.

This led to much speculation and unease among S P Setia's employees and other shareholders on the direction of the company.

The statement also highlighted that PNB's involvement in its investee companies is mainly through board representation and the day-to-day operations are under professional managers.

"PNB is an investment fund and its role is to look out for good companies to invest in and not to manage these companies," it stated.

PNB said it sees a difference between S P Setia's fundamental value and its share price caused by the present global market turmoil. This is why it is seeking to increase its stake in the property developer.

"PNB is also committed that when markets stabilise, it will maintain an appropriate shareholding spread with the capacity to attract not just local but also foreign institutional funds and retail participation," it stated.

To recap, PNB after having raised its shareholding in S P Setia to 33.16%, launched a mandatory general offer (MGO) for the developer at RM3.90 per share and 91 sen per warrant.

Since then, PNB and funds under its management have increased their shareholding to over 38% by acquiring shares and warrants in the open market.

The offer is conditional upon PNB receiving more than 50% of the voting shares of S P Setia.

Industry observers said the 50% threshold is easily achievable if Kumpulan Wang Pesaraan (KWAP) and the Employees' Provident Fund (EPF), which collectively have an 18% stake in S P Setia, accept the offer.

Observers also said S P Setia may face lower liquidity in its shares if PNB increases its stake to more than 50%.

"The smaller float may reduce the attractiveness of S P Setia to foreign funds," said an analyst, adding that the developer has traditionally been the top pick among foreign investors.

According to S P Setia's 2010 annual report, foreign shareholders collectively held a 14.7% stake.

"Amid the global economic uncertainties, quite a large number of foreign funds may opt to exit, as it would be difficult to find buyers for large blocks of shares," the analyst said.

Another issue raised by observers is the commitment of Liew, who has a 11.26% interest in S P Setia, and the company if he decides to sell his entire stake to PNB.

While PNB has stated its intention for Liew and his team to continue running S P Setia, there is no indication if Liew will hold on to his stake.

"Liew accounts for a very significant part of S P Setia's business in terms of branding and expertise," said the analyst, adding that minority shareholders may not want to hold on to S P Setia if Liew decides to sell his stake to PNB.

"If he sells out, he would no longer be a stakeholder, but more of a professional manager," the analyst said, adding that Liew's entrepreneurial drive is a major factor behind S P Setia's success.

PNB has continued to increase its stake in S P Setia, while the EPF has trimmed its interest.

From Oct 4 to 6, PNB and funds under its management acquired more than 11.5 million shares in S P Setia. The EPF disposed of 2.5 million shares on Oct 6 and left with a 13.16% stake.