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KUALA LUMPUR: GCH Retail (Malaysia) Sdn Bhd, a unit of Singapore-listed Dairy Farm International Holdings Ltd  (fundamental: 1.95; valuation: 2.1), has found its 30% bumiputera equity partner in Syarikat Pesaka Antah Sdn Bhd, which is controlled by the Negeri Sembilan royal family, after operating without one for the last 14 years.

Sources told The Edge Financial Daily that Syarikat Pesaka Antah will pay as much as RM100 million for its stake in the country’s largest supermarket and hypermarket chain, which operates under the Jason’s, Mercato, Cold Storage and Giant brands.

“The 30% stake does not include the assets such as the buildings owned by GCH,” the source said, adding that the deal is expected to be completed this Friday. 

The divestment also does not include the Guardian stores which GCH owns.

The Edge Financial Daily understands that the retailer underwent a restructuring exercise in mid-2014, resulting in the operations of the Guardian stores (health, beauty and pharmacies) being removed from GCH and parked under a newly-formed company called Guardian Health And Beauty Sdn Bhd.

According to sources, Syarikat Pesaka Antah inked an agreement to purchase the 30% equity interest in December last year — just days before the expiry of the grace period given by the Domestic Trade, Cooperatives and Consumerism Ministry to GCH to comply with the minimum local equity ruling.

Foreign hypermarket operators fall under the purview of the ministry, which is responsible for granting licences for their expansion. However, their assets and specialty stores business such as Guardian do not require the minimum 30% bumiputera equity participation.

GCH has not had a local partner since 2001, as stipulated under the Guidelines on Foreign Participation in the Distributive Trade Services 2010 (which replaces the 2004 guideline). A grace period spanning over a decade given to GCH drew the industry’s criticism with players questioning the need for such rules if there was no need to adhere to them.

Based on the latest financials available from the Companies Commission of Malaysia, in the financial year ended Dec 31, 2013, GCH posted a net profit of RM54.09 million on revenue of RM5.71 billion.

Today, GCH has a total of 126 supermarkets and hypermarkets nationwide. It is part of Dairy Farm International, which also has businesses in Hong Kong, Taiwan, Singapore, Indonesia and India.

This is not the first time Syarikat Pesaka Antah has emerged as the local bumiputera partner to a foreign hypermarket operator. In 2005, the company took a 30% stake in Magnificient Diagraph Sdn Bhd which operated France’s Carrefour chain here.

In mid-January 2010, the stake was sold back to Carrefour Malaysia.

The shareholders of Syarikat Pesaka Antah include Tunku Naquiyuddin Tuanku Ja’afar, Tunku Imran Tuanku Ja’afar, Tunku Nadzaruddin Tuanku Ja’afar, Tunku Jawahir Tuanku Ja’afar, Tunku Dara Tunku Naquiah Ja’afar and Tunku Irinah Tuanku Ja’afar, with each holding an equal 16.65% stake in the company. The remaining stake is held by Tunku Mudzaffar Tunku Mustapha.

GCH was previously known as Giant TMC Bhd. The most recent record showed DFI Mauritius Ltd holding a 98% stake in GCH, while Dairy Farm Management Ltd has the remaining 2% stake. The public record has yet to reflect the new shareholding structure.

Over the years, GCH has acquired several local retail chains including Royal Ahold’s Top Supermarket chain, Xtra from Lion Group, Bestmart, Anda, Milimewa and Bintang Retail which operates the Bintang hypermarkets and Mercato supermarkets.

 

This article first appeared in The Edge Financial Daily, on February 25, 2015.

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