PETALING JAYA: UBG Bhd is still on a lookout for acquisitions to expand its construction and infrastructure business empire after proposing to buy controlling stakes in Putrajaya Perdana Bhd and Loh & Loh Corp Bhd.
Apart from assets, UBG is also scouting around for shareholders to add value to the group.
It is believed that UBG has identified and is in negotiations with prospective companies.
“The group's acquisitions should exceed RM800mil within the next 12 months,’’ a source told StarBiz.
The source said the initial acquisition targets were Malaysian companies, including listed firms, and that it would later expand its sights to the South-East Asia region.
UBG did not rule out the possible entry of new major shareholders in the company as a result of the acquisition. There might also be a privatisation exercise if the situation warranted it, the source said.
UBG has proposed to buy Abu Dhabi-Kuwait-Malaysia Investment Corp’s (ADKM) 37.6% and 49.2% stakes in Loh & Loh and Putrajaya Perdana respectively at RM4.85 per share in cash.
UBG also intends to launch a general offer for shares not owned in Putrajaya Perdana and Loh & Loh at the same price. UBG, however, will maintain the listed status of both Putrajaya Perdana and Loh & Loh.
In addition, the group wants to take over the entire equity interest in CMS Roads Sdn Bhd and CMS Pavement Tech Sdn Bhd.
PPES Works (Sarawak) Sdn Bhd will be issued 44.65 million UBG shares at RM2.50 each for its stakes in the two companies while the Sarawak Economic Development Board will receive RM23.37mil for its stake in CMS Roads.
To participate in the enlarged infrastructure group, ADKM subsidiary Majestic Masterpiece Sdn Bhd will buy UBG shares via private placement and on the open market.
ADKM also has agreed that it would hold its shares in UBG for a minimum three to five years.
Upon completion of the exercise, Majestic Masterpiece will hold 45.6% in UBG, Cahya Mata Sarawak Bhd unit Concordance Holdings Bhd will own 37.2% and institutional investors such as Permodalan Nasional Bhd, Abu Dhabi Investment Authority and Kuwait Investment Authority will collectively own about 10%.
“The only sell-down will be when Majestic Masterpiece tries to institutionalise the shareholding of UBG,’’ the source said, adding that its shareholding would not dip below 30% during that time.
StarBiz understands that Majestic Masterpiece will trim its shareholding to 35% in the future.
UBG's proposed asset injection aims to fill the vacuum that was created after the group sold its shareholding in Rashid Hussain Bhd to the Employees Provident Fund last year.
It has until Feb 21 to submit its regularisation plan to the authorities.
UBG will be sitting on a cash pile of nearly RM1bil after the first phase of the group's restructuring. It will have the financial strength to go on an acquisition trail to enhance its earning base and more importantly, acquire expertise and know-how.
UBG deputy chairman Syed Ahmad Alwee Alsree said in a statement that the proposals were the first phase of the group's vision to turn UBG into a super regional MESEA (Middle-East South-East Asia) institution.
“One of our focus areas is to build one of the largest construction and infrastructure firms in the MESEA regions to capitalise on the various government economic development activities,” he said, adding that Putrajaya Perdana and Loh & Loh were chosen to join the UBG stable because the companies had professional managements and healthy balance sheets.
Both companies were also leaders in their respective fields, and had synergies for UBG's overall MESEA strategy, he added.
“The injection of a high-powered professional management team; the emergence of new major sovereign wealth funds and institutional investors, are critical elements in the sustainable long-term economic development of UBG,'' Syed Ahmad said.
“It's our intention to build on this pool of professionals to take UBG to even greater heights of achievements and excellence,'' he added.
Among the listed construction companies that fit into UBG's acquisition list are IJM Corp Bhd, Gamuda Bhd, WCT Engineering Bhd, Zelan Bhd, MTD Capital Bhd, Ahmad Zaki Resources Bhd and TSR Capital Bhd.