Friday 29 Mar 2024
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KUALA LUMPUR (Sept 16): The price tag for a 40% stake in IWH-CREC Sdn Bhd, which Ekovest Bhd is currently in talks to acquire, is estimated to be RM1.5 billion, according to Tan Sri Lim Kang Hoo, the common shareholder of the two entities.

IWH-CREC is a joint venture (JV) that owns a majority 60% stake in the Bandar Malaysia development project near Sungai Besi in the capital city. The Ministry of Finance holds the remaining 40%.

To recap, Ekovest last Tuesday announced that it was going to commence exclusive negotiations to buy a 40% equity stake in IWH-CREC held by Iskandar Waterfront Holdings Sdn Bhd (IWH).

IWH-CREC is a 60:40 JV between IWH and China Railway Engineering Corp (M) Sdn Bhd (CREC) currently.

Lim is the controlling shareholder of both IWH and Ekovest. He holds a 63% stake in IWH and a 32.4% stake in Ekovest.

Should the negotiations bear fruit, IWH-CREC will have three shareholders, namely Ekovest (40%), IWH (20%) and CREC (40%).

Lim said the acquisition is going to benefit Ekovest in a long-term perspective as this will enable the construction outfit to have direct participation in the future developments in Bandar Malaysia.

"I am chairman for both companies, so I have to be fair for both companies. For Ekovest to participate, it will have a direct link to jointly develop any infrastructure or development in Bandar Malaysia. This is going to be very good for Ekovest's future order book.

"With the estimated gross development value of RM140 billion for Bandar Malaysia, Ekovest must have participation with IWH together with CREC," Lim told The Edge in an interview.

On financing the purchase, Lim said the group will look into various financing options that are suitable for the company including internal funding, bank borrowings and cash call options.

This proposal is subject to the approvals, waivers or consent of all relevant parties including, among others, shareholders of Ekovest.

When asked if he is confident that Ekovest shareholders will give green light on the proposed stake purchase, Lim said: "I do not have a say over the decision of shareholders. But, for such a good participation for Ekovest in the next 20 to 30 years to come, I do not see shareholders object to this proposal. But, they have their rights."

Bandar Malaysia to start in 2021

Meanwhile, Lim said the Bandar Malaysia project, which is to redevelop the former air force base in Sungai Besi, is ready to kick-start early next year after the settlement of RM1.24 billion payment due to the federal government by IWH-CREC.

The project has been delayed due to the Covid-19 pandemic, Lim said. It was initially planned to start in March this year.

In December last year, IWH-CREC inked a restated and amended share sale agreement with TRX City Sdn Bhd to buy a 60% equity interest in Bandar Malaysia Sdn Bhd — Bandar Malaysia's master developer — for RM7.41 billion.

IWH-CREC is required to pay an upfront RM1.24 billion deposit for the 60% stake in Bandar Malaysia. The amount comprises RM741 million deposit plus an additional RM500 million, which was due by Sept 15.

IWH-CREC settled the upfront payment for the 60% stake in Bandar Malaysia yesterday. It presented a cheque to Finance Minister Tengku Datuk Seri Zafrul Aziz at a ceremony.

This marked the official fulfilment of IWH-CREC's initial contractual obligations to the government to kick-start work on Bandar Malaysia.

Lim said IWH-CREC's ability to fulfil its commitment to the federal government despite the Covid-19 pandemic is proof of the JV's confidence in the Bandar Malaysia project.

"This is also significant because it shows that foreign investors are still upbeat and confident about Malaysia and its economy," he said, adding that Bandar Malaysia will serve as an intelligent new city to draw high-impact global finance, technology and entrepreneurial firms.

Chen ZhiGong, chairman of CREC Malaysia, said that Bandar Malaysia is a testimony of the strong and long-term bilateral relations and economic benefits shared by the people of Malaysia and China.

"I am confident Bandar Malaysia will have a major impact on Malaysia's economy as it will serve as a hub to further attract high-impact global multinationals," Chen said, noting that China-based companies have shown interest in setting up their regional headquarters in this new intelligent city.

IWH-CREC said the company will soon invite qualified local and foreign investors, developers, consultants and contractors to submit their proposals to participate in this development.

It added that there will be strong opportunities for bumiputera and Malaysian company participation, while the use of Malaysian construction materials, technologies and local talent will be prioritised.

The RM140 billion integrated development will feature integrated components covering finance, technology, medical science, education, tourism and entrepreneurship, as well as being an intelligent city.

While there are mounting concerns about an oversupply of office space, the stakeholders of the massive Bandar Malaysia development believe that the project could be the solution to the glut as more foreign companies are setting up regional headquarters in Kuala Lumpur.

Edited ByKathy Fong
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