Eco World’s SPAC plan gets Maybank’s thumbs-up

KUALA LUMPUR: Maybank Investment Bank Research is positive on Eco World Development’s (ECW) latest decision to venture overseas via a special purpose acquisition company (SPAC).

The SPAC, which will be led by the former SP Setia senior management, allows ECW to gain exposure to international property markets without overstretching its balance sheet and diverting its focus away from its Malaysian operations.

“Maintain earnings forecasts but place our RM6.59 target price under review pending further details. Reiterate BUY,” it said on Friday.

On Thursday, ECW has indicated its interest to subscribe for a 30% stake in Eco World International (EWI) for RM562.5m or 50 sen a share. The share subscription will also entitle ECW to 1,125m free detachable warrants.

“At this juncture, there are no details on the timing of EWI’s cash call, listing timeline and project pipeline,” it said.

EWI will be spearheaded by the former SP Setia senior management of Tan Sri Liew Kee Sin, Datuk Teow Leong Seng and Datuk Heah Kok Boon.

The management has accumulated a wealth of experience in countries such as Australia (via Fulton Lane and Parque Melbourne projects), the UK (Battersea Power Station project) and Singapore (18 Woodsville and Eco Sanctuary projects).

“We are positive on this latest development. The investment in EWI will allow ECW to gain exposure to overseas property markets without overstretching its balance sheet especially when most of the overseas accounting rules (for example Australia and UK) only allow recognition of property development profits on completion basis,” it said. 

Currently, EWI has no income generating business. The proceeds raised from the listing of EWI will be used to acquire properties in the UK and Australia.

“A 1.2-acre land at Church Street in Sydney, Australia held by the unlisted Eco World Sdn Bhd will likely be injected into the SPAC, we believe,” it said.