KUALA LUMPUR: Jaks Resources Bhd is acquiring a controlling 51% stake in privately owned property developer MNH Global Assets Management Sdn Bhd for RM93.2 million.

The acquisition will enable Jaks to immediately gain access to MNH’s on-going mixed development project known as Pacific Place @ Ara Damansara in Petaling Jaya, which has an estimated gross development value (GDV) of RM938.31 million.

MNH, which began developing the property in December 2010, is expected to complete it next year. The three-phase development consists of apartment buildings, shop offices, a retail complex and college accommodation.

In a statement to Bursa Malaysia yesterday, Jaks said the purchase of the MNH stake is through its wholly owned subsidiary Harbour Town Sdn Bhd. The vendor is Island Circle Development (M) Sdn Bhd.

Island Circle, whose two major shareholders are Chen Cheong Fat (65%) and Rasli Musamah (35%), owns 49% of Jaks Island Circle Sdn Bhd. A property development company, Jaks Island Circle is 51% owned by Jaks’ wholly owned unit Jaks Sdn Bhd.

“The proposed acquisition is synergistic to the core business activities of Jaks, i.e. construction and property development.

“The proposed acquisition of MNH, which is involved in property development mainly in Ara Damansara, would provide Jaks and its subsidiaries an opportunity to expand and strengthen the group’s existing business,” Jaks said.

Jaks said the gross development cost of MNH’s development is approximately RM704.16 million, which is being funded by a shareholders’ loan, bank borrowings and internally generated funds. The expected profit to be derived from the project is about RM234.15 million.

The RM93.2 million purchase price for the MNH stake values the firm at RM182.75 million. This is an 8.63% discount to the market value of  RM200 million for its real estate assets.

“The said discount is justifiable and attractive to the purchaser in view that the purchase consideration is via a cash transaction and given the development potential of the properties with a GDV of approximately RM938.31 million.”

Jaks will finance RM60 million of the purchase price with bank loans and use internally generated funds for the balance amount of RM33.2 million. The exercise is due for completion within six months.

Jaks said it is expected to benefit from the proposed acquisition as the properties are strategically located in Ara Damansara and have comprehensive amenities surrounding the mixed development.

“Ara Damansara is growing in affluence and affords excellent accessibility to transport infrastructure and other facilities. In addition, the properties enjoy good prominence and are surrounded by mature residential areas in its proximity, the success of which is expected to drive demand for Jaks’ future commercial projects,” it noted.

The Ara Damansara properties are surrounded by Saujana Golf & Country Club, Glenmarie Gold & Country Club and Tropicana Golf & Country Club Resort. It is within a 20km radius of Citta Mall, Empire Shopping Gallery, Sunway Pyramid, Subang Parade, Paradigm Mall ,The Curve, 1 Utama, Ikea and Sunway Giza.

This article first appeared in The Edge Financial Daily, on April 2, 2013.