KUALA LUMPUR (March 8): S P Setia Bhd today entered into a sale and purchase agreement (SPA) with Mekar Gemilang Sdn Bhd to acquire the remaining 50% stake in Setia Federal Hill for RM431.89 million cash.

Setia Federal Hill’s core asset is the two parcels of leasehold land near Bangsar, Kuala Lumpur, totalling about 51.57 acres.

“The purchase consideration is at a premium of 10.9% to the unaudited adjusted net asset value of Setia Federal Hill as at Dec 31, 2017 of RM778.64 million after taking into consideration the market value of land of RM2.35 billion or RM1,050 per square ft, the potential estimated gross development value (GDV) of up to approximately RM20.19 billion based on preliminary management estimates; and the prime location of the parcel,” said the property developer in the filing to Bursa Malaysia this evening.

S P Setia said the purchase consideration is expected to be funded through the cash proceeds from the issuance of Islamic Redeemable Convertible Preference Shares (RCPS-i A) by S P Setia, which was completed on Dec 6, 2016, and/or bank borrowings.

Setia Federal Hill is a joint venture company which was established to undertake a development project on the land, held equally by S P Setia and Mekar Gemilang.

Presently, Mekar Gemilang owns 50% equity interest and S P Setia owns the remaining 50% equity interest in Setia Federal Hill. Kota Cahayamas Sdn Bhd is the sole owner of Mekar Gemilang, which is said to be linked to tycoon Tan Sri Syed Mokhtar Al-Bukhary.

Upon completion of the proposed acquisition, Setia Federal Hill would become a wholly-owned subsidiary of S P Setia.

S P Setia is of the view that the location of the land in Bangsar and nearby to KL Sentral provides it with readily available amenities, facilities and infrastructure around the land will add value to the properties on the land.

“The proposed acquisition is expected to support and strengthen the strategic development objectives and value enhancement of the group,” it said.

The proposed acquisition would require approval from Unit Kerjasama Awam Swasta (UKAS) and if required, the Economic Planning Unit (EPU), to effect a change in the shareholding and equity structure of Setia Federal Hill.

“Barring any unforeseen circumstances, the application to the relevant authorities above in relation to the proposed acquisition is expected to be made within one month from the date of this announcement,” it said.

S P Setia share price dropped four sen or 1.25% to RM3.16, giving it a market capitalisation of RM11.94 billion.