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UEM Group, MMC Corp seen among Pan Borneo highway contenders

KUALA LUMPUR (April 4): AmInvestment Bank said it does not preclude the possibility of seeing Peninsular-based contractors being invited to set up joint ventures (JVs) to bid for jobs, after The Edge Weekly reported that UEM Group Bhd, MMC Corp Bhd and Warisan Tarang Construction Sdn Bhd are teaming up for the Sabah portion of the Pan Borneo Highway.

"Given the dearth of large Sabah-based contractors, we do not preclude the possibility of seeing Peninsular-based counterparts being invited to set up JVs to bid for jobs," the investment bank said in a note today.

Apart from Suria Capital Holdings Bhd, which is mainly involved in port operations and property development, there appears to be no other listed Sabah-based contractors.

Among the potential Peninsular-based players, AmInvestment Bank pointed out that WCT Holdings Bhd and Bina Puri Holdings Bhd are among the more active ones in Sabah over the past few years.

"While the exact turns of the PDP (project delivery partner) structure remain unknown at this juncture, we understand that open tenders will be called where pre-qualified Sabah contractors will be invited to participate," said the investment bank.

"We nevertheless believe it is still a tad premature to pre-empt the potential winners pending the finalisation of the JV and PDP structures.

"Near-term focus will remain with the Sarawak portion of the Pan Borneo Highway, where there are still eight more packages worth over RM1 billion each that are up for grabs among the 13 remaining consortia," said the investment bank.

AmInvestment Bank maintained the "overweight" rating on the construction sector.

The Edge Weekly reported over the weekend that UEM Group, MMC Corp and privately-held Warisan Tarang are teaming up for the Sabah portion of the Pan Borneo Highway.

The trio is believed to be forming a JV as the PDP for the Sabah leg. The 700km portion stretches from Sindumin to Tawau and is expected to cost RM16 billion.

Under the proposed agreement, Warisan Tarang is to have a lead 60% stake in the JV; the balance 40% will be equally shared between UEM Group and MMC Corp. Earlier, reports indicated that MMC Corp and UEM Group will have 30% stake each in the consortium with 40% for Sabah-based companies.

According to the report, the agreement could be signed as early as this week. – theedgemarkets.com

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