Company may sell 30% of highway business
EKOVEST Bhd is mulling options to monetise its highway assets, either via a stake sale or a flotation of its entire infrastructure arm, banking sources say.
According to the sources, talks entail selling a 30% stake in this business to international investors. The main asset in this segment of Ekovest is the Duta-Ulu Kelang Expressway (Duke) tolled highway, which is going through extensions. Ekovest’s other businesses are construction and property development.
A source says potential buyers for the highway assets of Ekovest are from Australia, the Philippines and China.
“The deal would also include the Duke phase 3 highway, which comes with a concession period of more than 53 years,” a source says.
Notably, the cap on foreign parties owning local highway assets stand at 30%. It is also understood that the international parties, which may include private equity firms, will come in as strategic partners.
Meanwhile, bankers also say that Ekovest is also looking to list its Duke tolled highway asset either in Malaysia or Hong Kong.
Ekovest declined to comment on the matter when contacted.
In January, Ekovest announced a plan to build Duke’s phase 3, now known as Setiawangsa-Pantai Expressway, at a cost of RM3.74bil. The project is expected to take 3.5 years to construct. The 35-km highway will cover areas stretching from Universiti Tunku Abdul Rahman, Wangsa Maju and Ampang to the Tun Razak Exchange and Kerinchi.
According to Bloomberg data, as at Dec 31, 2015, Ekovest had a total debt of RM2.12bil with cash and cash equivalents of RM810mil.
Ekovest is controlled by Tan Sri Lim Kang Hoo and Datuk Haris Onn Hussein, the brother of Defence Minister Datuk Seri Hishammuddin Hussein Onn.
Lim has a 20.19% stake in Ekovest, while Haris owns 18.29% via Kota Jayasama Sdn Bhd.
Ekovest first bought a 70% stake in the 18-km Duke with a 34-year concession under an RM325mil share-swap deal with Wira Kristal Sdn Bhd in 2012.
Under the deal, Ekovest issued 126.72 million new shares at an issue price of RM2.75 each in return for a 100% stake in Wira Kristal. Lim and Haris were the owners of Wira Kristal at that time.
Ekovest later acquired the remaining 30% stake in Duke from Malaysian Resources Corp Bhd for RM228mil in January 2015.
Ekovest is currently constructing the expansion of phase two of Duke, which costs around RM1.18bil.
The extension will expand the existing Duke from two ends; via a seven-km link from Sri Damansara and a nine-km link from Jalan Tun Razak.
Bandar Malaysia twist
Interestingly, Lim is also on a roadshow for its unlisted property development company Iskandar Waterfront Holdings Sdn Bhd (IWH).
The company is the master developer of Johor Baru’s waterfront properties and recently secured a mandate for the Bandar Malaysia project.
Lim owns a 60% stake in IWH through Credence Resources Sdn Bhd, while the remaining 40% is held by Kumpulan Prasarana Rakyat Johor, an investment arm of the state government.
IWH has been planning to go public for the past four years. However, it was said that IWH had put off its plans to go for a listing twice - the first was by the end of 2013, and the second in the first half of 2014.
In 2014, investment bankers had estimated the listing of IWH to be around US$300mil. But that was based entirely on its 4,300-acre Danga Bay waterfront city in Johor Baru where IWH is the master developer. Almost half the land is under water and being reclaimed in phases.
Notably, there is market talk that Lim is looking to monetise part of his stake in Credence. Although the deal is still at a preliminary stage, it is said that Tan Sri Quek Leng Chan counts as one of the the investors approached.
Bandar Malaysia is a huge development spanning 486 acres, where the plan is to have an integrated underground city modelled after the Montreal underground city in Canada.
Bandar Malaysia would also serve as the gateway for the high-speed rail line to Singapore and become a central transport hub with connections to the mass rapid transit lines, KTM Komuter, Express Rail Link and 12 other highways.
IWH, together with its China-based partner China Railway Engineering Corp (CREC), secured a 60% stake in the Bandar Malaysia project for RM7.4bil from 1Malaysia Development Bhd (1MDB).
The remaining 40% is held by 1MDB and may be transferred to the Finance Ministry. For the 60% stake, IWH-CREC needs to pay RM7.4bil to 1MDB in phases as the development progresses.
EKOVEST (8877) - Ekovest to monetise infrastructure arm
http://www.thestar.com.my/business/business-news/2016/04/23/ekovest-to-monetise-infrastructure-arm/
