SP Setia acquires I&P Group for RM3.65bil

Artist impression of the Alam proposed phase 7 (Temasya Kasih) Condominium in Temasya Glenmarie, Shah Alam. I & P Group Sdn Bhd is the developer for this project.

KUALA LUMPUR: SP Setia Bhd has agreed to buy sister company I&P Group Sdn Bhd for RM3.65bil in cash, which will enable it to almost double its landbank and fast-track its expansion plans.

In a filing with Bursa Malaysia, the property developer said it inked a conditional agreement on Thursday to buy a 100% stake in I&P from Permodalan Nasional Bhd (PNB) and AmanahRaya Trustees Bhd (as trustee for PNB's unit Amanah Saham Bumiputera) - both also SP Setia’s direct major shareholders.

(One ordinary share, held by I&P director Datuk Mohd Nizam Zainordin, was also purchased.)

The purchase consideration was arrived at on a willing buyer-willing seller basis after taking into consideration I&P’s adjusted unaudited consolidated net assets of RM6.01bil.

Hence the purchase price is at a 39% discount to the adjusted unaudited net asset value of the I&P group.

The I&P group, a township developer, has a landbank of about 4,276 acres located in the central part of Klang Valley and Johor Baru. Acquiring I&P will boost the SP Setia group’s landbank by 83% to 9,417 acres.

To raise funds to part-finance the acquisition, SP Setia is also proposing a rights issue of ordinary shares, a rights issue of new Class B Islamic redeemable convertible preference shares, and placement of new SP Setia shares. Each of the proposals is expected to raise up to RM1.2bil in gross proceeds.

The placement shares may be offered to local and foreign institutional investors.

Of the RM2.4bil proceeds from the rights issues (to be implemented concurrently), RM2bil will part-finance the proposed I&P acquisition while the rest will be for property development projects and general working capital.

The company is seeking additional borrowing to partly finance the proposed I&P acquisition.

SP Setia said it would submit the application on the proposals to the relevant authorities within two months.

The proposals were expected to be completed by the fourth quarter of 2017, it added.

The proposed transaction is in line with PNB’s recently announced strategic plan to transform the performance of its strategic and core companies as well as rationalise and enhance PNB’s property investments.

I&P Group Sdn Bhd was itself formed following the rationalisation exercise of three property companies under the PNB umbrella - Island & Peninsular Bhd, Petaling Garden Bhd and Pelangi Bhd - in 2008.

I&P Group has over 50 years of experience in township development.