To ensure the success of the deal, Permodalan Nasional Bhd (PNB) is ready to help fund SP Setia’s purchase of I&P Group for between RM3.5 billion and RM3.75 billion, reported The Sun Daily.
“As a long-term investor, we see this as another opportunity for PNB to enhance shareholders’ value and increase future dividend yields for our unitholders,” said PNB President and Group CEO Datuk Abdul Rahman Ahmad.
Upon completion of the transaction, it would create one of the largest property players in Malaysia and the region, with a total landbank of nearly 10,000 acres, combined annual revenue of RM5 billion and overall gross development value of RM122 billion.
SP Setia expects to finance the proposed acquisition through a mix of equity, borrowings and internally generated resources. As of 31 December 2016, it had around RM4 billion cash on hand.
The final selling price will be determined after performing the due diligence test on I&P Group, taking into account the aggregate market value of its existing developments and investment properties, in addition to its net asset value of RM3.16 billion as of end-December.
On Friday (14 April), SP Setia has signed a non-binding Memorandum of Intent (MOI) to begin negotiations on the purchase of the entire share capital of I&P Group from PNB and Amanah Saham Bumiputera’s trustee Amanahraya Trustees Bhd.
According to SP Setia President and CEO Datuk Khor Chap Jen, I&P is a good platform to facilitate future growth due to its robust balance sheet and minimal debt level.
He explained that the transaction would enable SP Setia to expedite its expansion plan and help achieve its target RM18 billion market capitalisation before 2021. At present, the company is valued at approximately RM10 billion.
“For now, our RM4 billion sales target stays. This acquisition will take a few months. By the time it’s completed, it will be towards the end of the year,” he said, adding they hope to finalise the terms of the transaction in just a few months.
Image sourced from Linkedin
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