Eco World plans to buy land in Kuala Selangor

Eco World Development Group Bhd has proposed to buy 2,198.4 acres of leasehold land in Ijok, Kuala Selangor for RM1.181bil.

In a filing with Bursa Malaysia, Eco World said its unit, Paragon Pinnacle Sdn Bhd (PPSB), had entered into five separate sale and purchase agreements with Mujur Zaman Sdn Bhd, Ringgit Exotika Sdn Bhd, Liputan Canggih Sdn Bhd and LBCN Development Sdn Bhd to buy the land.

The acquisitions, Eco World said, would provide it with sizeable tracts of land in the North-Western growth corridor of the Klang Valley.

“This will enable Eco World to establish a dominant presence in this area, with access to a new market catchment to complement its strong township positioning in the South-Western and South-Eastern corridors,” it said.

Eco World chairman Tan Sri Liew Kee Sin said the group was extremely excited about the proposed acquisitions.

“The opportunity to acquire more than 2,000 acres in the Klang Valley is indeed rare.

“This strategic acquisition will enable Eco World to establish a dominant presence in the up-and-coming North-Western Klang Valley growth corridor with access to a new market catchment to complement our strong brand positioning in the Central, South-Western and South-Eastern corridors,” he said in a statement.

The company has identified three projects to be carried out, including a 1,400 acre mixed-eco township project to be known as “Eco Gardens”, consisting mainly of landed and high-rise residential homes, among others.

It intended to build a 518-acre integrated gated industrial hub to be known as “Eco Business Park V”, and about 280 acres of affordable homes to be known as “Laman Indah”.

The estimated gross development value is RM15bil over a 15-year development period based on the preliminary management estimates.

The purchase consideration represents a discount of approximately 0.70% to the market value of the land.

The land is located at the north-west of the Klang Valley and is 45km from the Kuala Lumpur city centre, 40km from the Petaling Jaya city centre and 18km from the Sungai Buloh town centre.

Eco World said the deposit for the purchase consideration had been funded via internal funds, while the balance deposit and balance sum would be funded through a combination of internal funds, bank borrowings and/or equity funding.

“In this regard, Eco World wishes to highlight that its management is in the process of refining its partnership for a growth business model to raise equity funding at the project level,” it said.

It added that this would enable it to acquire sizeable strategic land without over-extending its balance sheet.

The partnership for the growth business model contemplates the proposed acquisition being first undertaken by PPSB.

Eco World intends to invite “like-minded” institutional, private equity and corporate partners to co-invest and fund PPSB.

This would result in a potential reduction of Eco World’s stake in PPSB.

It intended to maintain a minimum of a 30% equity stake in PPSB to ensure that the group continues to enjoy a meaningful share of the development profits.

It will appoint one of its subsidiaries as the development manager of the entire project, which will create a fee-based income stream.

Eco World expects the proposed acquisitions to be completed by the second quarter of 2016. - By The Star