PNB increases hold on S P Setia

PETALING JAYA: Even as the market awaits an alternative bid for S P Setia Bhd, Permodalan Nasional Bhd (PNB) is absorbing more shares from the market and increasing its interest in the property developer.

PNB, which on Sept 28 offered RM3.90 apiece to take over S P Setia, is believed to be the buyer for the 13.22 million shares or 0.74% of the developer's share base that changed hands off-market at RM3.89 apiece on Monday, Oct 3. The largest block of shares crossed in a direct off-market deal on Monday amounted to 9.82 million shares.

Last Friday, PNB had picked up 8.03 million shares at an average price of RM3.879 apiece and 34.54 million warrants at 88.4 sen apiece, on average, according to a filing on Monday.

The sellers for the S P Setia shares transacted off-market on Monday were not known at the time of writing.

S P Setia's major shareholders include the Employees Provident Fund (EPF), which has over 13% stake while S P Setia's founder and boss Tan Sri Liew Kee Sin owns 11.26%. Foreign institutional shareholders collectively own over 20% of S P Setia, analysts estimate. Kumpulan Wang Persaraan (KWAP), which had about 5% direct and indirect holdings in S P Setia as at Sept 21, had been paring down its stake and ceased to be a substantial shareholder on Sept 20, a Sept 26 filing showed.

Notably, the EPF was a net seller of S P Setia shares since the start of last week. Based on filings with Bursa Malaysia, it sold in the open market over four million shares or about 2% of its stake in S P Setia on Sept 26 and Sept 27.

To recap, PNB after having accumulated 33.16% in S P Setia last Wednesday, launched a mandatory general offer (MGO) for the property developer at RM3.90 per share and 91 sen for the warrants.

In response, the S P Setia board termed the proposal as one that fundamentally undervalues the company and said it would seek alternative offers. PNB has stated that it would not revise the offer.

It remains to be seen how things would pan out.  In the meantime, CIMB Research, for one, said PNB and S P Setia would be deprived of one of the most dynamic and aggressive CEOs in the property sector if Liew exits the company. "As S P Setia's employees are fiercely loyal to Liew, it is conceivable that many would want to join him in his next endeavour," it said. "In such a scenario, the price may turn out to be very high for PNB as it would end up with a company with a lot of landbank but without the senior management necessary to execute those projects," CIMB said in a recent note.

Meanwhile, HwangDBS Research is of the view that it is best for investors to adopt a "wait-and-see" approach given that S P Setia's board will seek a higher offer by PNB or other parties. However, the brokerage house said the challenge for any competing bidder would be the capital outlay as S P Setia is valued at some RM7.1 billion.

OSK Research deems the offer price as a "decent and reasonable" exit strategy for investors who should accept the offer particularly against the backdrop of weakening property market.

Separately, S P Setia on Monday announced the appointment of AmInvestment Bank Bhd as independent adviser on PNB's offer, subject to approval by the Securities Commission.