Tuesday 19 Mar 2024
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KUALA LUMPUR (Feb 20): Eco World International Bhd, the overseas property arm of Eco World Development Group Bhd, is hoping to fetch a "fair and reasonable" valuation for its upcoming initial public offering (IPO).

"The response that we have received so far has been good. Investors are optimistic but I cannot comment beyond that as we are entering the final stage of the bookbuilding process," said the group's president and chief executive officer Datuk Teow Leong Seng.

"I hope the final price will be attractive, with a fair and reasonable valuation," he told reporters after the signing ceremony of retail underwriting agreements and cornerstone subscription today.

Teow said he hopes the two joint principal advisers, Maybank Investment Bank Bhd (Maybank IB) and CIMB Investment Bank Bhd (CIMB IB), will arrive at "the right price" for the IPO that is slated to take place in the first week of April.

In a circular to its shareholders, Eco World International has come up with an illustrative IPO price of RM1.20, which is at a 12% premium to its net asset per share of RM1.07.

At RM1.20, valued at 1.12x of its book value, Eco World International estimates that its market capitalisation will be worth RM2.88 billion.

At today's ceremony, Eco World International signed a share placement agreement with Permodalan Nasional Bhd and Employees Provident Fund whereby both institutional funds will subscribe for 140.4 million shares, making them the cornerstone investors.

"We also anticipate a high subscription rate from our other institutional investors such as mutual and insurance funds," said Teow.

For the listing, Eco World International is allocating 449.5 million shares, or 18.7% of its enlarged share capital, to institutional investors.

Eco World International also signed agreements with six banks — Maybank IB, CIMB IB, Hong Leong Investment Bank Bhd, Alliance Investment Bank Bhd, AmInvestment Bank Bhd and RHB Investment Bank Bhd — where all of them will underwrite 480 million shares for retail portion, equivalent to a 17% of the enlarged capital base.

In its upcoming IPO, Eco World International proposed to issue 2.153 billion shares, and expects to raise gross proceeds of RM2.854 billion.

It said 48.4% or RM1.252 billion of the proceeds will be used for working capital and land acquisition purposes, while another 48% or RM1.241 billion will be used to repay bank borrowings, which are denominated in ringgit, British pound and Australian dollar.

The balance, said Eco World International, will be used for listing expenses and other related purposes.

Going forward, Teow expects Eco World International to start paying dividends to its shareholders beginning from financial year ending Oct 31, 2019.

"At this moment, we have not formulated any formal dividend policy. But once we start to recognise sales from our projects in United Kingdom and Australia by 2018, and subject to our cashflow position, we hope to be able to declare dividends to our shareholders," he said.

Currently, Eco World International owns some 12 acres of land in London and Sydney, with property projects having a total gross development value of RM12.96 billion.

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