S P Setia signed a conditional Share Purchase Agreement today to acquire I&P Group Sdn Berhad ("I&P Groupâ€) for RM3.65 billion. On completion, I&P Group will become a wholly-owned subsidiary of S P Setia, increasing its land banks from 5,141 acres to 9,417 acres.
On 14th April 2017, the Group entered into a non-binding Memorandum of Intent ("MOIâ€) with Permodalan Nasional Berhad ("PNBâ€) and Amanahraya Trustees Berhad (as trustee for Amanah Saham Bumiputera) ("ATR-ASBâ€) to commence negotiations on the said proposed acquisition.
S P Setia appointed three (3) independent valuers namely Messrs Jones Lang Wootton, Messrs CH Williams Talhar & Wong Sdn Bhd and Messrs Khong & Jaafar Sdn Bhd ("Valuersâ€) to appraise all the unsold completed properties, land held for property development, on-going property development and investment properties of I&P Group. The aggregated market value of the properties independently appraised stood at approximately RM7.391 billion. The unaudited net asset value ("NAVâ€) of I&P Group as at 30 April 2017 was RM3.23 billion. After factoring in this independently appraised market values, the adjusted unaudited NAV of I&P Group is RM6.01 billion. Accordingly, the purchase price of RM3.65 billion is at a discount of approximately 39.3% to the adjusted unaudited NAV of I&P Group.
"We are pleased with this transaction. This synergistic acquisition will further strengthen Setia's brand presence in Malaysia and help paves the way for the creation of greater shareholder value for S P Setia. I&P's land banks are located in Klang Valley and Johor Bahru, and mostly in areas where S P Setia had established a stronghold with its Setia brand. The I&P brand will facilitate S P Setia to access wider market segments. In addition, I&P Group also has a strong balance sheet" said Dato' Khor Chap Jen, President and CEO of S P Setia Berhad.
The I&P Group has 4,276 acres of land banks, which include 901 acres in Semenyih, 1,154 acres in Shah Alam and Klang area, and 1,704 acres in Johor Bahru. Among others, its key flagship ongoing developments include Bandar Kinrara, Alam Impian, Kota Bayuemas and Alam Sari in Klang Valley, and Taman Pelangi Indah, Taman Pelangi and Taman Perling in Johor Bahru. The combined undeveloped land banks would total up to 9,417 acres making S P Setia the third largest property developer in Malaysia by the size of land banks.
In conjunction with the announcement of the proposed acquisition, S P Setia also announced its fundraising proposal for the proposed acquisition. S P Setia proposed a renounceable rights issue of new ordinary shares in S P Setia to raise gross proceeds of up to RM1.2 billion, a renounceable rights issue of a new Class B Islamic redeemable convertible preference shares ("RCPS-i Bâ€) to raise gross proceeds of up to RM1.2 billion and a private placement of new shares to raise up to RM1.2 billion. The entitlement basis and the issue price of the rights shares and RCPS-i B will be fixed at a later stage. The profit rate for the RCPS-i B is fixed at 5.93% p.a. and is non-callable for the first 5 years. It will be convertible to ordinary shares at a conversion ratio to be determined later.
Both the proposed acquisition and the fundraising proposals are subject to shareholders' approval.