Hextar mulls acquisition of stake in PJ mall

This article first appeared in The Edge Malaysia Weekly, on October 4, 2021 - October 10, 2021.
(Photo by Mohd Izwan Mohd Nazam/The Edge)

(Photo by Mohd Izwan Mohd Nazam/The Edge)

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AGROCHEMICAL company Hextar Global Bhd is exploring an entry into the retail scene through the acquisition of a stake in the yet-to-be-completed Empire City Damansara Mall in Petaling Jaya, Selangor, sources say.

It is understood that Hextar, in which businessman Datuk Ong Choo Meng has combined direct and indirect interests of 69.02%, could buy a “substantial stake” in the mall and that an announcement on the matter may be made soon.

The RM500 million mall is part of the larger Empire City Damansara (ECD1) project — which has a gross development value of RM5 billion — developed by Mammoth Empire Holdings Sdn Bhd (MEH).The project also comprises hotels, offices and apartments.

MEH was founded by low-profile businessman Datuk Sean Ng Yee Teck and his partner Datuk Danny Cheah. It also developed Empire Hotel and Empire Shopping Gallery in Subang Jaya.

Details of the deal remain sketchy but it is learnt that the parties have been negotiating a deal for over three months and talks are now at an advanced stage.

Empire City Damansara Mall, located along Lebuhraya Damansara-Puchong, has a net lettable area of 2.5 million sq ft. It is understood that its value now is about RM500 million. The new opening date for the partially completed mall is expected to be 2023. “The mall will be operated by MEH,” a source tells The Edge.

When contacted for confirmation, Ong, who is the executive director of Hextar, declined to comment.

This is not Ong’s first retail foray. He recently emerged as the substantial unitholder of retail asset-focused KIP Real Estate Investment Trust (KIP REIT), which owns a portfolio of seven malls and has RM808 million in assets under management. Ong has a 20.087% stake in the REIT.

Last month, The Edge reported that his entry into KIP REIT will allow him to act as a sponsor, and potentially inject his portfolio of factories and warehouses under his other businesses into the REIT. Ong’s business ventures are diversified and include glove manufacturing, furniture, and plastic and industrial products.

Meanwhile, Hextar, which is involved in the entire agrochemical supply chain, from research and development to manufacturing and distribution, announced that it was also looking to establish a Syariah-compliant digital bank. In July, together with Fass Payment Solutions Sdn Bhd’s SPV Ihsan Equit Sdn Bhd, it entered into a consortium agreement with Dagang NeXchange Bhd’s major shareholder, Arcadia Acres Sdn Bhd.

In the first half ended June 30, 2021, Hextar posted a net profit of RM18 million on the back of RM213.52 million in revenue. This compares to a net profit of RM20.56 million and revenue of RM205.28 million achieved a year ago. In the financial year ended Dec 31, 2020, Hextar posted a net profit of RM44.48 million and revenue of RM418.64 million.

It is unclear how Hextar plans to finance the purchase. As at June 30, 2021, its total short- and long-term borrowings stood at RM106.07 million. It also had cash and cash equivalents of RM28.89 million as at June 30.

As for MEH, this is not the first asset it has sold in recent years. In the past, it had disposed of several of its commercial assets and land to pare down debts and for working capital. In 2017, the Empire Shopping Gallery was sold to Pelaburan Hartanah Bhd (PHB) for RM570 million cash, with a call option to buy back the mall on the fifth anniversary of the sale. MEH also has the right of first refusal should PHB decide to dispose of the asset within five years. MEH currently operates this mall.

In 2019, MEH sold the four-star Wolo Bukit Bintang in Kuala Lumpur to HYM Group for RM115 million. In the same year, the company offloaded its 61-acre tract of land in Damansara Perdana, Selangor, to Exsim Development Sdn Bhd for RM760 million. The parcel was originally earmarked for the development of ECD2. Exsim also purchased another 4.5 acres adjacent to ECD1.

Apart from the land purchase, Exsim also entered into an agreement with MEH to complete several of the outstanding developments within ECD1. MEH, which at the time had decided to wholly own and operate the mall, is now selling a portion of it to Hextar. MEH is understood to still be in control of two hospitality components — McGuffin Hotel and Autograph.

On Friday, shares of Hextar closed at RM1.25, valuing the company at RM1.6 billion.

Editor's Note

Following the publication of this article, Rubberex Corp (M) Bhd, another company linked to Datuk Eddie Ong Choo Meng, announced on Oct 4 a proposal to acquire a 20% stake in the Empire City Damansara Mall.

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