PETALING JAYA: Marubeni Corp of Japan intends to take up to a 20% stake in SHL Consolidated Bhd over the next five years.
For a start, Marubeni is expected to acquire 6.5%, representing 15.5 million shares in SHL. Last Friday saw an initial off-market tranche of 7.3 million shares changing hands at RM2.46 each. And yesterday a second off-market block deal of 8.15 million shares was done at RM2.46 each.
Sources told StarBiz that top officials from Marubeni would be in town next week to discuss the realignment of board seats. They are also expected to discuss the number of board seats to be allocated to Marubeni.
Sin Heap Lee Development Sdn Bhd, a unit of SHL, bought Marubeni’s 40% equity interest in Sin Heap Lee-Marubeni Sdn Bhd (SHL-M) for RM18mil cash.
SHL told Bursa Malaysia last Thursday that the acquisition of 18 million shares in SHL-M would pave the way for a strategic partnership between Marubeni and SHL.
“The acquisition enables Marubeni to take up substantial direct interest in SHL. It launches a new relationship between SHL and Marubeni, which is a significant step forward that allows for greater collaboration between both corporations,” SHL had said.
OSK Investment Bank, in a report last Friday, said: “The potential crown jewel for SHL could be Marubeni’s huge township developments in east Jakarta, the Philippines and cities in China.
“This could potentially bring SHL into the international arena and leverage on SHL’s expertise to develop some parcels of its townships in Asia.”
Marubeni is an established Japanese multinational company with businesses ranging from manufacturing, mining, technology, finance, trading to property development and construction.
According to OSK, the co-operation between SHL and Marubeni was forged in 1988/89 when SHL roped in Marubeni in a 60:40 joint venture to develop the Bandar Sungai Long township in Cheras.
“Since then the township has proven to be an extremely lucrative business for the JV partners,” OSK said.
The township has 10,000 units of mixed development with a population of 40,000. The recent addition of the Universiti Tunku Abdul Rahman business campus, with the capacity to accommodate up to 15,000 students, has added more vibrancy.
“In addition to the success of Bandar Sungai Long, SHL also consulted for Marubeni for its development project in China which has also seen great success,” OSK said.
“This provides the catalyst that Marubeni may be keen on a JV with SHL to revive the projects in the Philippines and Indonesia, which have slowed down since the 1997/98 financial crisis. SHL has extensive expertise in township development as well as engineering and construction.”
With Marubeni’s size and stature, the group is expected to have the capacity to finance or secure financing at more favourable rates for the JV development projects.
“Given the scale of development of the projects in question, a strong financier will hasten the development of the land in question,” it said. “In addition, Marubeni has years of relationships in the overseas market.”
OSK expects “explosive earnings growth” for SHL, should Marubeni rope in SHL to develop the overseas townships.
On the other hand, SHL’s involvement would depend on whether SHL, in the end, found these development projects viable, OSK added.