SP Setia to buy sister company I&P Group for RM3.65bil cash

KUALA LUMPUR: SP Setia Bhd has agreed to buy sister company I&P Group Sdn Bhd for RM3.65bil in cash, which will enable it to almost double its land bank and fast-track its expansion plans.

In a filing with Bursa Malaysia, the property developer said it yesterday inked a conditional agreement to buy the entire stake in I&P from Permodalan Nasional Bhd (PNB) and AmanahRaya Trustees Bhd (as trustee for Amanah Saham Bumiputera) – both also SP Setia’s direct major shareholders – as well as Datuk Mohd Nizam Zainordin.

Mohd Nizam, an I&P director, owns one ordinary share in I&P.

The purchase consideration was arrived at on a willing buyer-willing seller basis after taking into consideration I&P’s adjusted unaudited consolidated net assets of RM6.01bil.

The I&P group, a township developer, has a land bank of about 4,276 acres located in the central part of Klang Valley and Johor Baru. Acquiring I&P will boost the SP Setia group’s land bank by 83% to 9,417 acres.

To raise funds to part-finance the acquisition, SP Setia is also proposing a rights issue of ordinary shares, a rights issue of new Class B Islamic redeemable convertible preference shares and placement of new SP Setia shares. Each of the proposals is expected to raise up to RM1.2bil in gross proceeds. The placement shares may be offered to local and foreign institutional investors.

Of the RM2.4bil proceeds from the rights issues (to be implemented concurrently), RM2bil will part-fi- nance the proposed I&P acquisition while the rest will be for property development projects and general working capital.

The company is seeking additional borrowing to partly finance the proposed I&P acquisition.

SP Setia said it would submit the application on the proposals to the relevant authorities within two months.

The proposals were expected to be completed by the fourth quarter of 2017, it added.

The proposed transaction is in line with PNB’s recently announced strategic plan to transform the performance of its strategic and core companies as well as rationalise and enhance PNB’s property investments.

I&P Group Sdn Bhd was itself formed following the rationalisation exercise of three property companies under the PNB umbrella – Island & Peninsular Bhd, Petaling Garden Bhd and Pelangi Bhd – in 2008. I&P Group has over 50 years of experience in township development.