KUALA LUMPUR (Nov 8): Eco World International Bhd (EWI) is partnering renowned UK construction firm Willmott Dixon to jointly develop 12 sites in Greater London and the South East of England.
In a statement today, EWI announced that it has inked a Heads of Agreement (HoA) with Willmott Dixon today to acquire a 70% equity interest in 11 project sites there.
The sites, said EWI, will have a capacity of 6,700 residential units with a potential gross development value (GDV) of at least £2.5 billion (RM13.86 billion) — over 5.54 times the developer’s market capitalisation of RM2.5 billion.
“There is also a framework agreement in place for the development of a further 1,500 units (on the 12th site) of which the GDV is too early to determine,” said EWI.
Combined, EWI said the agreements could increase EWI’s UK presence fourfold. EWI currently has an ongoing development of 2,500 high-end residential units in Prime Central London under another joint venture with another developer, Ballymore Group.
“After considering numberous proposals offered to us, we are delighted to be partnering a company of the experience and stature of Willmott Dixon in a deal that will potentially expand our presence in the UK to four times its current size,” said EWI executive vice chairman Tan Sri Liew Kee Sin.
Concurrently, EWI said it will also potentially acquire a 70% stake in Be Living Ltd, Willmott Dixon’s development management arm.
“This will provide us with a strong pool of talent and manpower resources to bring our UK business to greater heights going forward,” said EWI president and chief executive officer Datuk Teow Leong Seng.
“Our long-term goal is for EWI to be a truly international developer with strong local presence and customer following in the UK, similar to what the Eco World brand enjoys in Malaysia today,” added Lim. “The proposed partnership with Willmott Dixon will greatly facilitate this.”
Through the deal, EWI expects to gain "substantial" local market share, due to the location of the projects and “the nature and affordable price points of the developments proposed”.
“Most of the projects fall within the price bracket that would entitle potential buyers to benefit from government homeownership initiatives such as the Help to Buy scheme, where the government will provide an equity loan for new build residential properties of up to 40% of the price within Greater London and 20% outside London,” it said.
“The equity loan will be interest free for a duration of 5 years,” it added.
The company said its decision to become a local player — together with the scale of its proposed investment — clearly demonstrates its “strong belief” in the fundamental strength of the UK housing market, as well as the long-term growth potential of the nation’s economy.
While the value of the acquisitions has not been finalised, EWI said the HoA — pending board approval — is expected to be formalised in Dec 2017.
“Funding for the proposed acquisition is expected to come from a combination of the proceeds of EWI’s recent initial public offering and bank borrowings, or other debt instruments, details of which will be disclosed later,” it added.
Shares of EWI closed unchanged at RM1.04, giving it a market capitalisation of RM2.5 billion.