Ekovest will only buy on the cheap, says MD

> Decision on merger with Iskandar Waterfront City lies with independent directors and shareholders

KUALA LUMPUR: Ekovest Bhd, which is evaluating a proposed merger with Iskandar Waterfront City Bhd (IWC), will only buy on the cheap, said Ekovest managing director Tan Sri Lim Keng Cheng.

He said the company’s independent directors will decide the way forward at its upcoming board meeting and will make the necessary announcement.

“I don’t want to speculate as it will influence the independent directors’ and shareholders’ decision. My personal view is that Ekovest stands for economy (and) investment. We only buy cheap things,” Keng Cheng told reporters after its AGM yesterday when asked to comment on the merger.

The independent directors will have to accept the proposal and shareholders will then have to vote on it. It was reported that at least over 50% of votes are needed to approve the acquisition.

Chief among concerns surrounding the proposed deal are that it would weigh on Ekovest’s balance sheet should minority shareholders opt for the RM1.50 cash payment option.

Tycoon Tan Sri Lim Kang Hoo, who controls both Ekovest and IWC, made a proposal to merge the two companies after a proposed deal between IWC and its parent company Iskandar Waterfront Holdings Sdn Bhd (IWH), announced in March this year, fell through last month. Kang Hoo proposed that Ekovest acquire the outstanding 62% it does not own in IWC at RM1.50 a share.

The previous merger fell through as it was “no longer consistent with the benefits and intentions it was originally envisaged”. It hit a major stumbling block when IWH lost its coveted status as master developer of the RM200 billion Bandar Malaysia project in May.

Meanwhile, Keng Cheng said Ekovest aims to see revenue contribution of 40% from construction, 30% from highway concession and 30% from property development in the next five years. At present, 70% of its revenue comes from construction, 20% from highway concession and 10% from property development.

He said the move is a risk management measure, as a huge construction business will tend to overgear and face risks in getting payment.

Ekovest has an order book of RM6 billion that can last for four to five years. It also has a tender book of RM4-5 billion.

Keng Cheng said this is a good year for the construction counters with a slew of government projects like MRT3, High Speed Rail and East Coast Rail Link.

The company has no issue with the government’s decision to freeze approvals for luxury property projects and will build more properties below RM1 million.

Keng Cheng said it has obtained development orders for most of its land in Kuala Lumpur. He said it will consider building educational hubs or institutions.

Ekovest has six property development projects with potential gross development value in excess of RM7 billion lined up in its 10-year development master plan. The company has a landbank of 30 acres located primarily in northern Kuala Lumpur and will be the focus of its property division in the coming years.