Eco World scraps SPAC plan

Eco World International Bhd (EWI) withdrew its application today which was submitted last October to be listed as a special-purpose acquisition company (SPAC), said its executive vice-chairman Tan Sri Liew Kee Sin.

Liew told a press conference that EWI would instead pursue an alternative listing route “in a couple of months” by submitting an application to the authorities for an initial public offering (IPO) and listing of its shares on the Main Market of Bursa Malaysia based on the market capitalisation route of at least RM500mil.

It will work in consultation with the Securities Commission (SC), merchant bankers and other relevant authorities towards this end.

The company aims to list “in six to seven months from now, subject to approval” of the relevant authorities. It is targeting to raise about RM2bil from the proposed listing and IPO to fund its acquisitions.

To recap, EWI had last year submitted to the SC to list a SPAC. However, a SPAC IPO involves a shell company that does not have an identifiable core business activity or any other income stream. In this particular case, EWI already had pre-determined assets prior to its listing. The company was kept in limbo.

Eco World Development Group Bhd (EWB), the two-year-old company where Liew is chairman, will continue to work with EWI towards taking a 30% stake in the proposed listing and IPO. EWB will look after local operations while EWI will look after international operations.

Liew said the two companies would have a single branding.

On the rationale of having two listed companies, he said this was to ensure that EWB would not be over-geared.

Liew added that EWI would also find interest among funds which might want to invest in overseas properties via this vehicle.

The move to withdraw its earlier application and re-submit a new one under an alternative route “will give clarity of direction” to the company and its management team, said analysts.

Under the SC’s guidelines, there are a few routes for listing, of which the market capitalisation test is one of them if the applicant’s core business is not of an infrastructure nature.

Said Liew, “Since we submitted our original application to be listed as a SPAC, much has happened. We have secured three strategic residential sites in London and one prime residential site in Parramatta, Sydney. One project, London City Island, has also been launched in May and we will be previewing the Parramatta project this weekend prior to its launch in the next few months.”

The three London sites were acquired by Eco World Investment Co Ltd, a private vehicle controlled by Liew and his right-hand man Datuk Voon Tin Yow. EW Investment entered into an agreement with Ballymore Group on Jan 11, 2015 to acquire a 75% stake in Eco World Ballymore Holding Co Ltd (EcoWorld-Ballymore), which will be developing three large-scale residential schemes in London.

The three projects are London City Island, phase 2, Embassy Gardens, phase 2 in Nine-Elms and Wardian, London (previously known as Arrowhead Quay) in Canary Wharf. The estimated combined gross development value (GDV) for the three projects is £2.257bil (or about RM13.176bil based on the exchange rate of £1:RM5.8378 as at June 15, 2015)

The Sydney project was bought by Eco World Development Sdn Bhd in May 2014 via a 100% subsidiary, Eco World Sydney Development Pty Ltd. EWI will have a right of first refusal to buy all four projects at the original acquisition cost plus holding costs and any planning/development expenses incurred.

On the speed in which EWI was moving, Liew said: “I am already 57. Do I wait for 10 years? Or do I retire and just count my money? I have the skills and the people who have the skills and the expertise. Business is about taking opportunities.”

EWI president and CEO Datuk Teow Leong Seng said it was felt that withdrawing the SPAC application and submitting a fresh IPO based on market cap on the Main Board was “best”. A SPAC involves a two-tier process, the application process and the seeking of shareholders approval for the assets to be acquired.

In a direct IPO market cap listing, the two processes are merged into one because the listing is based on existing assets.

Subject to the approval of the relevant authorities, EWI is targeting to raise about RM2bil from its proposed listing and IPO to fund the four acquisitions.

Separately, EWB announced a net profit of RM14.87mil on the back of revenue totalling RM575.85mil for the first half of its financial year ending Oct 31, 2015. On a quarterly basis, its second-quarter net profit amounted to RM11.81mil, with revenue totalling RM417.82mil.

As at May 31, 2015, year-to-date group sales amounted to RM1.187bil, with RM622.8mil contributed by projects in the Klang Valley and RM563.8mil coming from Iskandar Malaysia.

EWB president and CEO Datuk Chang Khim Wah said the company is targeting to have sales of RM3bil this year and RM4bil next year. - By The Star