SP Setia’s disposal of Battersea project will ease capital commitment

KUALA LUMPUR: SP Setia Bhd’s (SP Setia) stake disposal for Phase 2 of the Battersea Power Station (BPS) Commercial Assets will ease the group’s commitment in the mammoth development, analysts say.

As per a joint press release by SP Setia and Sime Darby Property Bhd (Sime Darby Property), the ownership reorganisation for Phase 2 of the BPS Commercial Assets took a major step forward with the signing of a sale and purchase agreement last Friday between Battersea Phase 2 Holding Company Ltd (Battersea Phase 2 Holdco), and PNB-Kwasa International 2 Limited, a joint venture company formed by Permodalan Nasional Bhd (PNB) and the Employees Provident Fund Board (EPF) to undertake the acquisition.

Battersea Phase 2 Holdco is a wholly-owned subsidiary of Battersea Project Holding Company Limited, which is owned by Sime Darby Property and SP Setia, each holding a 40 per cent stake, and EPF holding the remaining 20 per cent.

According to the statement, under the terms of the sale and purchase agreement, Battersea Phase 2 Holdco will dispose of the commercial elements of the Battersea Power Station building for a base consideration of 1.583 billion pounds (equivalent to approximately RM8.351 billion).

“The deal, which we believe is one of the biggest in the UK, will effectively increase the group’s unbilled sales to RM11.3 billion,” the research arm of Public Investment Bank Bhd (PublicInvest Research) said.

“We understand that it will be billed progressively according to the construction stage claims.

“All told, we are positive on the asset monetisation as it would ease SP Setia’s capital commitment in the mammoth development and help to counter the soft property earnings locally.”

Assuming a 12 per cent profit before tax (PBT) margin, PublicInvest Research said the deal is expected to realise circa RM400 million in profits during its construction period. The transaction is expected to be completed in the first quarter of 2019.