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GuocoLand to take 27% stake in EcoWorld International's IPO
GUOCOLAND Limited has agreed to take a 27 per cent strategic stake in Eco World International Berhad (EWI) in the latter's initial public offering (IPO) in Malaysia - a move that extends its global footprint into the UK and Australia.
EWI, which was set up by Bursa-listed Eco World Development Group Berhad (EW Berhad) in 2013 to undertake overseas development projects, is targeting to raise more than RM2 billion (S$670 million) to fund the development of four projects in London and Sydney.
Singapore-listed GuocoLand said in a regulatory filing on Thursday that it has signed a conditional shareholders' agreement with EW Berhad and its founder Liew Kee Sin on the potential participation in EWI's planned IPO.
GuocoLand currently operates in four markets: Singapore, China, Malaysia and Vietnam.
"With a substantial exposure to Asia, GuocoLand has been on the lookout for investment opportunities in other markets," said Raymond Choong, GuocoLand group president and chief executive officer. "The UK and Australia property markets offer scalability; and we believe that with the right products and locations, they offer reasonable returns."
EWI owns a 75 per cent stake in three development projects in London and 100 per cent stake in one development project in West Sydney with a combined total estimated gross development value of about £2.4 billion (S$4.1 billion).
As at Oct 3, the cumulative sales (including reserved units) from the four projects amount to £1 billion.
GuocoLand will be one of the two largest shareholders in EWI, holding an equal stake as EW Berhad, with a right to nominate up to three directors to the board of EWI. Mr Liew's stake in EWI will be diluted to 10.3 per cent of the enlarged issued and paid-up share capital of EWI.
GuocoLand said that its investment will be funded by internally generated funds. This is not to have any material effect on its net tangible assets per share or earnings per share for the current financial year ending June 30, 2017.
Trading of GuocoLand shares was halted before the announcement, and was lifted at 2 pm.