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Saturday, 15 March 2014 | MYT 12:00 AM

Felda Investment Corp to buy into Encorp?

The Encorp Strand Mall is one of the major developments of Encorp.

The Encorp Strand Mall is one of the major developments of Encorp.

ENCORP Bhd is expected to see another change in its major shareholder this year.

Sources say that Felda Investment Corp (FIC), a newly set up investment arm of Federal Land Development Authority (Felda), is believed to be eyeing for a substantial stake in the mid-cap construction and property group.

In July last year, the shareholding of Encorp saw a major change when former executive chairman Datuk Seri Dr Mohd Effendi Norwawi decided to sell out via his private vehicle Lavista Sdn Bhd, which owned a 30.55% stake in Encorp.

The stake was bought over by both Encorp group chief executive officer Yeoh Soo Ann and chief operating officer Mohd Ibrahim Masrukin.

“For now, it is still unclear whose block of shares FIC is ogling at,” say sources, while adding that FIC’s interest in Encorp comes as no big surprise given the latter’s reputable track record.

Among Encorp’s signature development projects in Malaysia and Australia include its flagship Encorp Strand in Kota Damansara, Encorp Cahaya Alam in Shah Alam,

The Enclave Hillside Villas in Batu Feringghi, Encorp Marina Puteri Harbour in Nusajaya and Residences on McCallum Lane in Perth.

As at June 2013, Encorp’s gross development value stands at RM3.5bil with its construction division’s order book generating over RM2.2bil and its concessions valued at RM2.2bil.

When contacted, both Felda chairman Tan Sri Mohd Isa Abd Samad and FIC chief executive officer Mohd Zaid Abdul Jalil declined to comment, citing that: “FIC is still at its infancy stage.”

Set up in July last year, FIC is one of the four income generating models created by Felda to support the new generations of Felda settlers.

Thus, FIC has been tasked to monetise Felda’s existing assets including 22-acre prime land bank in Kuala Lumpur and hotels by way of undertaking ventures in property-related projects and further develop Felda’s hotel ventures under the Felda Residence brand name, among others.

It was reported that FIC via Felda also have some RM8bil worth of quoted and unquoted shares in companies in Malaysia.

Sources told StarBizWeek that FIC is currently identifying new businesses and also streamlining its existing ones.

For now, the core businesses identified by FIC include hotels/hospitality, property development, travel/tourism and manufacturing businesses.

Under hotels and hospitality, which Felda has been involved since 1991, sources point out that FIC is in the process of rebranding and considering a name change for its Felda Residence (FR) chain of hotel.

There are seven Felda Residences in the country including FR Tekam in Pahang, FR Trolak and FR Hotsprings in Perak, FR Kuala Trengganu in Trengganu, FR Sahabat in Sabah and FR Tanjung Leman in Johor.

This exclude the three new ones bought over by FIC last year namely Hotel Grand Borneo in Sabah for RM86mil, Hotel Sri Costa in Malacca for RM24mil and UK-based Grand Plaza serviced apartments in Bayswater central London for a hefty RM497mil.

FIC came under heavy criticism from the detractors of Felda last year for splurging over RM600mil on the three ventures within a short span of five months.

Another FIC investment that was closely scrutinised last year was its acquisition of a 25% stake in Iris Corp Bhd which it critics say has little relevance to FIC’s operations.

But the management of FIC rebuffed doubters by saying that all its investments are strategically planned to benefit Felda and its settlers.

In the case of Iris, FIC is hoping to ride on the company’s agriculture technology and merge it with Felda agriculture’s businesses for to extract better value creation.

The Grand Plaza purchase, meanwhile, is considered to be a long term strategic investment given its highly potential capital appreciation for FIC.

A source close to FIC says it is most ironic why the investments of Felda group of companies are often questioned unlike those investments made by other government-linked companies such as Khazanah, Permodalan Nasional Bhd or even Tabung Haji.

Tags / Keywords: FIC , Encorp

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