PRG plans to subscribe up to 29.9% stake in S'pore-listed property firm

This article first appeared in The Edge Financial Daily, on November 7, 2018.
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KUALA LUMPUR: PRG Holdings Bhd plans to subscribe to up to a 29.9% stake in Catalist-listed Capital World Ltd, which is engaged in property development in Malaysia.

The proposed investment will allow PRG to participate in Capital World’s flagship project in Johor Baru, featuring four million sq ft of integrated development comprising a shopping mall, hotel, serviced suites and serviced apartments.

The shares in Capital World closed at six Singapore cents (18 sen) on Monday, valuing it at S$75.07 million. A back-of-the-envelope calculation suggests a 29.9% stake would amount to some S$22.5 million.

In a filing with Bursa Malaysia, PRG said it had signed a non-binding memorandum of understanding (MoU) with Capital World for the proposed investment on the terms and subject to the conditions to be set out in a definite agreement.

“The parties will, as soon as practicable and in good faith, negotiate and execute the subscription agreement within two months from the date of this MoU,” it added.

In a separate statement, PRG group managing director Datuk Lua Choon Hann said the proposed investment is part of the group’s overall strategy to continue building up its property development and construction division in becoming one of the significant property players in Malaysia.

“We realise that there is tremendous synergy between both groups and we look forward to growing hand-in-hand with Capital World. Immediately, we can collaborate by introducing the medical and wellness elements in Project Capital City and future development projects which will enhance the appeal of Capital World’s product offering.

“We believe that Capital World’s niche business model of identifying joint-venture opportunities in strategic locations to offer unique and innovative products to the market will allow us to stand out from stiff competition,” Lua added.

Capital World executive director and chief executive officer Siow Chien Fu said the new financing will be used to fund existing development, as well as expedite the launch of new pipeline development projects.

PRG shares closed unchanged at 77 sen on Monday, bringing a market capitalisation of RM238.59 million.