Grand start for Malaysia’s biggest IPO

KUALA LUMPUR: Eco World International Bhd (EWI), which is slated to be Malaysia’s biggest listing this year, could not have gotten off to a better start.

The property developer secured two of the country’s biggest institutional funds – the Employees Provident Fund (EPF) and Permodalan Nasional Bhd (PNB) – as its cornerstone investors.

EWI president and chief executive officer Datuk Teow Leong Seng said the funds would be taking up 30% of the initial public offering (IPO) shares that have been allocated to the institutional investors.

He said EWI would be looking to attract more cornerstone investors.

“The EPF and PNB will take up 30% of the 18% of the institutional offering under the IPO. We’ll be signing on the other cornerstone investors progressively,” Teow said at a signing ceremony here yesterday.

He added that EWI would be targeting other potential cornerstone investors from within the region.

“We’re limiting our efforts to Malaysia, Singapore and Hong Kong. We have a limited offering, so we want to give the opportunity more to the regional funds, especially the Malaysian ones.”

CIMB Investment Bank and Maybank Investment Bank are joint global coordinators for the cornerstone agreement.

EWI yesterday signed a share subscription agreement with Tan Sri Quek Leng Chan’s GuocoLand Ltd, whereby the latter will take up a 27% stake in EWI’s enlarged issued and paid-up capital.

GuocoLand will act as co-anchor in the IPO and strategic investor, giving it the right of first refusal to partner the developer in projects in Singapore, China and Britain.

EWI also signed a retail underwriting agreement with six banks to underwrite its retail offering comprising 408 million IPO shares, representing 17% of its enlarged issued and paid-up capital.

Post-listing, EWI will have an enlarged paid-up capital of 2.4 billion shares.

“If the IPO proceeds as planned, we’re looking at a 26% public shareholding spread,” said Teow.

EWI is targeting to raise gross proceeds of up to RM2.5bil from its proposed IPO, which it expects to complete by next month. The company plans to list on the Main Market of Bursa Malaysia by April.

Proceeds from its IPO will be used to fund the development of its projects in the United Kingdom and Australia.

EWI has three projects in London, namely, London City Island in Leamouth Peninsula, Embassy Gardens in Nine Elms and Wardian, situated next to the financial district of Canary Wharf in London. It also has West Village, Parramatta, in Sydney, Australia.

Based on valuation reports prepared by Jones Lang LaSalle and m3property, the total estimated gross development value for all four projects is about RM12.96bil.

“Construction for the London properties has commenced, while the one in Sydney will begin shortly. We expect to deliver the first apartments in London early next year,” said Teow.

“As at Dec 31, 2016, we had already achieved sales of RM6.3bil. Take-up stands at around 64% across all of the four projects. Give us another year and we should finish selling everything,” he added.

Teow pointed out that EWI could not sign on any more projects until it is listed.

“But we are continuously looking for new land, we’ve not stopped looking. Post-IPO, our corporate gearing is practically zero. All we’ve got is basically project-based loans. So, with our partner GuocoLand, that gives us a lot of capacity to take on new sites.”

Teow said EWI’s sales actually picked up after Brexit.

“Post-Brexit sales were higher than pre-Brexit. This is because we operate in a more affordable part of the market, from £800 (RM4,448) per sq ft up to about £1,500 (RM8,340) per sq ft.

“The sales momentum has been carrying on right into January, so this end of the market is very active. The past seven months, post-Brexit, it’s all about the confidence and looking at our sales, I don’t think we’ve experienced any slowdown.”

Teow said the high-end segment, namely, properties above £2mil, had been suffering a slowdown in sales.

“But we’re not in that space anyway. At £1,500, it’s a bit more on the low end of prime central London. You don’t buy property into London because it’s not part of the European Union. You buy into London for many reasons.

“It’s a world-class global city, safe haven, very deep and liquid market. But what has underpinned London is short supply. It has been that way for many years,” he said.
Read more at http://www.thestar.com.my/business/business-news/2017/02/21/grand-start-for-biggest-ipo/#EUZFFUEESGFF4ifj.99