EKOVEST’S ROAD TO BANDAR MALAYSIA
The objective is to create the most intelligent, purposebuilt city in the world, says chairman
EKOVEST Bhd’s proposed acquisition of a stake in Is kan dar Waterfront Holdings Sdn Bhd’s (IWH) 50 per cent equity interest in the joint-venture company (JVCo) developing Bandar Malaysia will make it one of the biggest conglomerates in Southeast Asia.
Ekovest seeks to acquire 40 per cent of IWH’s equity.
Its chairman, Tan Sri Lim Kang Hoo, said Ekovest’s construction order book — currently at RM1 billion — would balloon multiple times over the 20- to 30-year period.
In an exclusive interview with the New Straits Times, Lim said Ekovest’s infrastructure and property development divisions would also get a boost.
The group’s businesses will expand significantly over the estimated time frame for the completion of the Bandar Malaysia project.
NATIONAL ECONOMIC PROJECT
“Ekovest will benefit from our investment in the project. The project will generate new order books. All the group’s businesses from infrastructure development, real estate to toll operation will also expand.”
He said based on international real estate consultants estimates, the gross development value (GDV) of the Bandar Malaysia project is estimated to be more than RM200 billion. The Minister of Finance Incorporated (MOF Inc) had in December last year estimated a RM140 billion GDV for the project.
Bandar Malaysia, a prime national economic project located at the site of the former Royal Malaysian Air Force base in Sungai Besi, will be developed across 194.5ha and will be the single largest city development project in Southeast Asia.
The master developer of the project is IWH-CREC Sdn Bhd, which holds 60 per cent in Bandar Malaysia Sdn Bhd, while the government holds the other 40 per cent through MOF Inc’s wholly-owned subsidiary TRX City Sdn Bhd (TRXC).
IWH-CREC is a joint venture between IWH and China’s stateowned enterprise, China Railway Engineering Corp. IWH holds a 60 per cent stake while the remaining 40 per cent is owned by CREC. However, they both share 50:50 in economic benefits.
SHAREHOLDER INTEREST
Lim is a common shareholder of Ekovest and IWH. He holds 63 per cent in IWH through his private vehicle Credence Resources Sdn Bhd. The Johor government holds the remaining 37 per cent through Kumpulan Prasarana Rakyat Johor Sdn Bhd.
IWH-CREC tendered for the project, which attracted around 40 bidders, at RM12.35 billion and its 60 per cent stake works out to RM7.41 billion.
The JVCo on Sept 15, 2020, paid RM1.241 billion to TRXC for the 60 per cent stake in Bandar Malaysia. This is the 10 per cent deposit of RM741 million plus RM500 million (advance payment).
According to Lim, IWH and CREC paid an equal share of RM620.5 million each to TRXC (based on their 50:50 economic interest).
Ekovest is being offered 40 per cent equity interest of the 50 per cent equity interest of IWH in Bandar Malaysia. This effectively works out to 12 per cent of Bandar Malaysia upon the completion of a proposed corporate exercise in the next few months.
IWH has made an offer to Ekovest to acquire 40 per cent of the former’s 50 per cent economic interest in the JVCo for up to RM1.3 billion, RM248.2 million in cash which is payable upon approval of Ekovest’s shareholders.
“Ekovest is acquiring Bandar Malaysia from IWH at the same price as IWH-CREC with TRXC. Subject to Ekovest’s shareholders’ approval and other approvals as required, the payment which is immediately due from Ekovest to IWH is RM248.2 million, the balance is payable directly to TRXC, the vendor for Bandar Malaysia.”
Lim said the remaining to be committed by Ekovest to TRXC was RM1.05 billion, which would be paid over the next three years as per the terms of agreements for the acquisition by IWH-CREC with TRXC/MOF Inc. Ekovest will be able to benefit on the recurrent order book for the project.
CENTRAL BUSINESS DISTRICT
He said Ekovest’s participation in Bandar Malaysia, which is set to be the new central business district (CBD) for Kuala Lumpur, would have long-term upside for the group.
“Many took the view that the Bandar Malaysia development will worsen the oversupply of properties in Kuala Lumpur.
“But I disagree totally with that view. Otherwise, I would not embark on this project,” he said, adding that his experience in Johor Baru 23 years ago, when he launched Danga Bay, had proven otherwise.
Johor Baru back then was one of the cities worst-hit by the oversupply of properties, with high unemployment. It lacked economic activity and was severely affected by the Asian Financial Crisis in 1997.
“Johor Baru was considered the backyard of Singapore. Upon the launch of the first economic corridor by former prime minister Tun Abdullah Ahmad Badawi in
2006, the economy has grown more vibrant and today, it is one of the most active states in Malaysia.”
Lim said buying into Bandar Malaysia was “a CBD investment”. Historically, he said, any investment in CBD would appreciate in terms of price and value.
The main objective of Bandar Malaysia is to bring in foreign direct investments and create the most intelligent and purposebuilt city in the world, he said.
“We need key national projects to jump-start demand and entice economic activities across sectors to absorb the oversupply of properties as once a big project is mobilised, we will require many professionals, consultants, contractors and building materials.”
BOOSTING MALAYSIA-CHINA BILATERAL RELATIONS
“We are grateful to the Malaysian government for giving the opportunity for IWH-CREC to anchor this development project, which we believe will create the economic impact and activities that are much needed by the country.
“IWH’s offer to Ekovest is so that I can offer participation opportunities to all companies which I have investments in. We need to balance our offer of business opportunities to all stakeholders.
“Ekovest has the track record, skills set and technical know-how in large scale infrastructure and construction. Our Duke 3’s alignment is parallel with the Bandar Malaysia project and this connectivity is valuable.
“IWH acts as the master developer and Ekovest as the master contractor. The two business models complement each other and we are working with our strategic partner, a Fortune 500 company, for the project development.”
Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said during the cheque presentation by IWH-CREC on Sept 15 thatBandar Malaysia would boost business across all sectors as it would be a hub for local and international fronts.
Zafrul said with a GDV of RM140 billion, it would be the biggest development of its kind in Malaysia.
The ambassador of the People’s Republic of China to Malaysia, Bai Tian, said this project signified the strong bilateral ties between China and Malaysia.
“This is one of the largest projects invested in by Chinese companies in Malaysia, and draws huge expectations from both countries, as well as the rest of the world.”