Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily, on June 29, 2016.

 

KUALA LUMPUR: Eco World International Bhd (EWI), whose property projects are mainly in the UK and Australia, will go ahead with its initial public offer (IPO) exercise despite the uncertainties caused by Brexit.

“There is never a good time for listing,” said EWI president and chief executive officer (CEO) Datuk Teow Leong Seng when the press asked about the timing of the IPO yesterday.

“Of course, the outcome (of the Brexit vote) was not what we expected, but it has its positives. The immediate positive is that we are going into the listing to raise about RM2.6 billion, so with the weakness of the pound sterling, it will give us additional 10% firepower in London,” said Teow.

Some analysts commented that EWI’s IPO might not be smooth sailing no thanks to Brexit, which dampened the sentiment of the global financial markets including Bursa Malaysia, considering that the company has large exposure to the UK property market.

Teow reiterated that Brexit serves as an advantage to EWI, as UK’s real estate prices are expected to be cheaper by 10% due to the weaker currency.

“[Overseas] sales have been very strong and continue to be very strong, and as long as your sales are there, your costs are under control and it will have no impact on our numbers,” he explained, adding that 40% of buyers for EWI’s projects are outside the UK.

“International buyers now have got a 10% discount on whatever they buy in London,” he said.

Teow pointed out that EWI has a natural hedge for its projects. “The only exposure we have is in the profits. So when we convert it to ringgit, it may come off a bit.”

“But because of the profit recognition method in the UK, we only recognise profits upon completion, so that’s only going to happen two years down the line in 2018,” he added.

Teow acknowledged that the listing exercise was delayed by the approval process as a result of the entry of a substantial pre-IPO shareholder.

The IPO is now expected to take place in September or October. “The listing was initially planned to take place in July but because of the entry of this property group, we need to clear a few things with the SC (Securities Commission),” he said at a press conference.

Teow said EWI was initially looking for a cornerstone investor but the prospective investor, which is a property group, wanted to be more than a cornerstone investor.

“They wanted to be at the same level as Eco World Development, so that’s why they are a co-anchor [for the IPO],” he added.

When asked the name of the investor, Eco World Development Group Bhd chairman Tan Sri Liew Kee Sin, who was present, said the partner is “an international player from Malaysia and is a Singaporean entity”, adding that the identity of the investor could not be revealed before Securities Commission’s approval.

The Edge weekly reported that tycoon Tan Sri Quek Leng Chan is keen on owning a major stake in EWI through one of his Guoco-related vehicles, alongside EcoWorld.

Quek owns 76% of Hong Kong-listed Guoco Group Ltd, which in turn, owns about 65% of Singapore-listed GuocoLand Ltd.

As at March 31, 2016, EWI chalked up £837 million (about RM4.53 billion) worth of sales from its three projects in the UK and one project in Australia in 11 months.

“This is quite a credible effort. We have been selling consistently through the last few months despite the Brexit debate,” Teow said.

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