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The Star Online: Business

i-Bhd builds from within

Posted: 20 Dec 2013 08:00 AM PST

IT'S a known fact that information communication technology (ICT) and theme park-based i-City in Shah Alam has major development plans over the next eight years.

Thus, the corporate exercise announced by its master developer i-Bhd on Friday evening wasn't exactly surprising.

The numbers told of a fund-raising story which involves a share split, rights, warrants and a bonus issue that would strengthen the company's coffers by some RM200mil.

At the same time, i-Bhd will be issuing convertible securities amounting to RM502.3mil for three parcels of land for its next phase of i-City as well as for its KLCC project. The convertible securities scheme will enable i-Bhd to build up its cash reserves by the equivalent amount over the next five years.

In a nutshell, the completion of this whole exercise will see the paid up capital of i-Bhd increasing to RM775mil with some 1.55 billion shares at a par value of 50 sen. The best part is the company will still be debt-free.

i-Bhd's founder and executive chairman Tan Sri Lim Kim Hong has grand designs of making the 29.13ha i-City the ultrapolis landmark and centre of urbanisation of Shah Alam. i-City is slowly but surely getting the numbers it wants.

Currently, it is receiving some 90,000 visitor arrivals on a weekly basis, with an average visitor spending RM15. This spending too, is inching upward. Take up rates for its condominium projects this year, namely i-Residence and i-SOVO are all above the 90% level.

"We are starting to see the transformation happening. Over the next three years, when our mall and hotels are ready, you will start to see the full extent of i-City's development," said Lim.

He explained that the corporate exercise was mainly to fund i-Bhd's investment properties, namely its regional mall, the CentralPlaza@i-City for which it has earmarked RM66.54mil. i-Bhd has a 40% stake in this mall.

The remainder of RM133mil will be used to construct its 6,000-bay car park, its hotels and for general working capital.

"Now we have some RM50mil worth of investment properties. In three years' time, this will increase significantly to RM1bil with the completion of the mall, car parks and the hotels. At a yield of 5%, that is the sort of recurring income we are targeting to generate for the company," said Lim.

i-Bhd deputy chairman Datuk Eu Hong Chew said that at the rate the company was developing i-City, the theme park will soon make up only 25% of the entire business.

"Nonetheless, the theme park is important. We are rejuvenating and bringing in new rides. Next year, we are planning an Aliens meet Avator sort of ride. This is our differentiator. Perhaps that is why our recent developments have set new benchmark pricing in Shah Alam. Our condos are now going for an average of RM800 per sq ft," he said.

Wouldn't RM800psf be a little on the steep end?

Not if you believe in i-City's growth story. Afterall, it is still in the early stages of development.

i-City has so far developed half a million sq ft of land out of a total of 13 million sq ft of approved gross floor area. Once it completes the mall and its current ongoing projects, it will still have 7 million sq ft of land for development.

"I have been in many different businesses since I was 14," said Lim, who made his first million at 18, exporting furniture pieces.

Lim was previously the founder of Dreamland Malaysia Bhd (now known as FACB Bhd). He cashed out his 55% stake in 1995 for RM350mil.

Subsequently, he set up a total of 14 factories in China dabbling in stainless steel pipes, power plants and air conditioners.

"A businessman and an entrepreneur are two different people. The businessman will never build a theme park because it needs a gestation period. As an entrepreneur, we want to create something different, where benefits may come later. The entrepreneur also does not know how to enjoy life and works until he dies. I-Bhd for me, will be my final vehicle," says Lim.

The corporate deal

The deal announced on Friday evening was twofold. The first was a corporate exercise, while the second is a related party transaction (RPT) involving two pieces of land in I-City.

On the corporate side, I-Bhd has proposed share split which entails the subdivision of one share into two.

This will see the number of shares in the company increasing to 228.97 million shares from 114.49 million shares previously. The paid up capital remains the same at RM114.49mil.

With the completion of the share split, i-Bhd will then undertake a renounceable rights issue of new shares together with free detachable warrants raising gross proceeds of RM200mil.

Of this RM200mil, some RM160mil will be utilised for acquisition of property development land, while RM16.83mil will be repaid to Sumurwang for certain parcels of land for its I-Sovo development. The remainder will be used for general working capital and expenses related to the proposals.

There is also a proposed bonus issue in I-Bhd on the basis of one bonus share for every five shares held in the company.

Assuming the completion of the proposed share split, a total of 45.6 million bonus shares shall be allotted.

"Through this deal, we are able to continue developing i-City, while at the same time, strengthen the company's balance sheet.

"This is because we are paying the vendors of the land via ICULS and RCULs, and not cash. The vendor will also offer his ICULs and RCULs to shareholders if they feel they want to participate in the company's growth," said Eu.

The land acquisition

i-Bhd and i-City Properties Sdn Bhd, (a wholly owned subsidiary of I-Bhd) are purchasing two pieces of land from The Peak @ KLCC.

The Peak, together with Sumur Heights Sdn Bhd, Sumurwang Industries Sdn Bhd, Top Capital Sdn Bhd, Sumur Marketing Sdn Bhd and Sumurwang Development Sdn Bhd are the vendors and beneficial owners of the land, SOHO land and the Tower Lands.

Directors of The Peak are Tay Siew Lian and Tang Soke Cheng. Tay is Lim's sister in-law while Tang is corporate service manager of i-City.

Lim indirectly owns about 75% in I-Bhd through Sumurwang and Sumur Ventures. Lim, and his wife Puan Sri Tey Siew Thuan are the directors of most of the vendor companies.

It is important to take note that Sumurwang is the land owner which owns all the land plots in i-City while I-Bhd is the developer and project owner of i-City.

The 4.9ha SOHO land is priced at RM241.3mil while the Tower land measures 3.01ha is priced at RM129mil. Both the SOHO land and the Tower land forms part of the 29.12ha of land located in Shah Alam which houses the group's i-City project.

The i-SOHO development project encompasses four phases that will comprise a mix of both residential and commercial units with total gross development value of RM1.8bil over five years.

the Tower Land development encompasses a mixed development of residential service suites, a hotel tower and office tower with a GDV of RM3.7bil over four years.

To fund these two pieces of land, i-Bhd will be issuing a combination of ICULs and RCULs. For the SOHO land, there will be an issuance of RM196.3mil five year 2% stepping up to 3% ICULS, and RM45mil 5 year 3% stepping up to 5% RCULS.

For the Tower Land, there will be the issuance of RM105mil worth of ICULS and RM24mil of RCULs.

i-Bhd's revenue for the third quarter ended Sept 30 jumped to RM35.54mil, from RM16.32mil a year earlier, on higher percentage of completion recognised from ongoing property development projects.

Net profit for the quarter fell to RM2.68mil from RM3.95mil in the previous corresponding period on the back of high non-recurring operating costs in the leisure segment.

For its nine-month period, i-Bhd posted a 168% increase in revenue to RM96.49mil from RM35.92mil, while net profit rose to RM14.39mil from RM7.74mil a year earlier.

The property development division contributed RM59.9mil, representing 62% of the year-to-date group revenue.

Yinson finalises Fred Olsen buy

Posted: 20 Dec 2013 05:19 PM PST

KUALA LUMPUR: Yinson Holdings Bhd has fully completed the settlement for Fred Olsen Production ASA's acquisition and currently owns 97.1% of the outstanding shares and votes in the Norwegian company.

The acquisition was settled at 9.40 Norwegian krone (equivalent to RM5.20) per share in cash.

Yinson said the acquisition increased the company's current offshore services fleet size to four floating production, storage and off-loading facility (FPSO) and one floating storage and off-loading facility (FSO).

"These additional assets with its long-term contracts will increase the company's orderbook to about RM7.5bil in total," it said in a statement.

Upon completion of the offer, Yinson intends to initiate a compulsory acquisition of the remaining shares in Fred Olsen Production not owned by the company.

It is also proposing to delist Fred Olsen Production from the Oslo Stock Exchange, it said. 

"It is expected that a compulsory acquisition of the remaining Fred Olsen Production' shares will be effected in mid-January 2014," it added. — Bernama

2013 has been biggest for equity fundraising globally since 2010

Posted: 20 Dec 2013 03:23 PM PST

LONDON/NEW YORK/HONG KONG: This year has been the biggest for equity fundraising globally since 2010, thanks to improving confidence among companies on the back of the strong investor demand for stocks, according to Thomson Reuters data published on Friday.

A total of $774 billion has been raised worldwide from equity capital market (ECM) offerings as of December 18, including flotations, issues of bonds which are convertible into stock, and secondary share offers by already-listed companies, a rise of 24 percent on 2012.

Companies globally raised $159.7 billion from initial public offerings (IPOs), a 37 percent increase on 2012 and bankers expect 2014 to carry on where 2013 left off, with many companies bringing forward plans to go public as they look to take advantage of the strong market conditions and low levels of stock market volatility.

"It's the perfect storm for the IPO product," said Evan Damast, global head of equity syndicate at Morgan Stanley, saying increasing confidence in global growth and company earnings as well as investors seeking to boost the proportion of equities in their portfolios were supporting the market.

"These factors, in addition to positive deal performance, are encouraging investors to spend more time analyzing and investing in new issue opportunities."

At the same time private equity firms , encouraged by soaring stock markets to seek exits for their investments proved a big driver of IPOs in both the United States and Europe. In London, Blackstone Group and CVC floated amusement parks operator Merlin Entertainments while Blackstone also listed hotel operator Hilton Worldwide Holdings in New York.

Large floats such as Hilton and Plains GP Holdings helped lift the volume of U.S. IPOs by 22 percent to $49.3 billion, making it the strongest year by proceeds since 2000. Technology companies like Twitter were also among those who completed high-profile public offerings in 2013.

According to the data Goldman Sachs was the top-ranked bank this year, having worked on more than $90 billion worth of deals, almost $26 billion ahead of second place JP Morgan.

"The great thing about the IPO market in 2013 was that it was reasonably broad-based in terms of investor interest in different sectors, company business models, stage-of-company development and so forth," said Matthew Sperling, head of equity advisory for North America at Rothschild.

And bankers expect companies to push ahead through a normally quieter January to make the most of strong market conditions.

"There's a tremendous amount of pitching activity going on so there will be some things that come in the first quarter," said Joseph CastleBarclays' global head of equity syndicate.

Large U.S. deals next year are expected to come from a variety of sectors including industrial and financial institutions, including Chrysler Group LLC, Banco Santander SA's U.S. consumer lender and General Motors' former financial services affiliate Ally Financial.

In the technology sector, high profile floats could include Chinese Internet company Alibaba and payments company Square.


In Europe, where the volume of new stock market listings more than doubled this year to $34.9 billion, bankers said the return of U.S.-based investors was a big supporter of deals.

"The general view on the part of investors is that Europe has turned a corner and is perceived as undervalued ... there are opportunities here," said Craig Coben, head of EuropeMiddle East and Africa ECM at Bank of America Merrill Lynch.

New money flowing into equity funds have been key, said Coben, as without them investors don't buy IPOs, or demand deep discounts as they have to sell an existing holding to buy the new stock.

Privatizations, including Polish power company Energa and British postal service Royal Mail, were a major source of activity, with governments expected to continue to take advantage of strong markets to privatize their holdings, particularly in banks bailed out during the financial crisis.

Britain began selling its stake in Lloyds Bank in September and is likely to offload more shares in early 2014.

"If markets continue on their current path we may see more and more privatizations, including the unwinding of government positions in some of their listed holdings," said Edward Sankey, global co-head of equity syndicate and co-head of EMEA ECM at Deutsche Bank.

European deals have been dominated by UK firms, which made up nearly a quarter of ECM proceeds, and over a third of IPOs.

While a string of UK retail and consumer companies, including Poundland and Pets at Home, are set to go public next year on the back of improving economic growth, advisors expect a broader range of activity in Europe in 2014.

Investors are looking at southern Europe again, bankers said, with several Spanish IPOs in the works including industrial testing firm Applus+.


In contrast to other regions, equity issuance in Asia Pacific ex-Japan shrank for a third straight year in 2013, down 1.4 percent to $168.7 billion.

However, IPO proceeds rose 7.4 percent to $41.5 billion as a surge in deals in AustraliaNew Zealandand Hong Kong helped offset weaker markets in Malaysia and South Korea and a freeze on new listings in mainland China.

Bankers and analysts predict a bumper 2014, with large deals in Hong Kong putting it centre stage for IPOs again. Among those expected are a $6 billion deal from Chinese meat processor Shuanghui International Holdings and a multi-billion dollar float from health and beauty retailer A.S. Watson.

The resumption of IPOs in Shanghai and Shenzhen next month should also provide a much needed boost to deal volumes in the region, after the absence of new issues for more than a year in China.

"When they re-open, there will be a boom," said Ringo Choi, Asia Pacific IPO leader at consultancy firmEY in Hong Kong.

Next year should also see a surge in IPOs of Chinese firms in the United States, benefitting from the strong performance of listings in 2013 including Autohome Inc and 500.com. Bankers and analysts estimate the number of floats could exceed 20, from eight in 2013 and just three in 2012.

"The overall trend is an improving one," said a report by EY on the global outlook for IPOs. "The market window looks its best in several quarters for the start of 2014."- Reuters

Kredit: www.thestar.com.my

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