Mercurius starts PE fund for Indochina resort, leisure property investments

CATALIST-LISTED Mercurius Capital Investment will start a private equity fund focusing on resort and leisure property investments in the Indochina region, the company announced on Friday.

It has also appointed industry veteran Richard Tan Liat Chew as an adviser to Mercurius in relation to the setting up of this fund. Mr Tan will also be the principal member of the fund.

Mercurius said it is setting up the fund in connection with several Thailand investment opportunities that it had agreed in principle to with Thailand-listed real estate developer Apex Development, under a June 12 addendum to their earlier joint-venture (JV) agreement.

In the addendum, both parties said they were interested in forming JVs for two mixed-use development projects at Yao Beach in Krabi, Thailand - the Club Med Krabi Resort and Residences project, as well as the Sheraton Krabi Yao Beach Resort and Residences project. Both consist of hotel and residential components.

Mercurius and Apex also agreed, in the addendum, to negotiate the option of Mercurius making a bulk purchase of the remaining units of Sheraton Residence from Apex at a price mutually agreed upon. The residence is part of an integrated development at Po Bay in Phuket, Thailand, which also includes a hotel property, the Sheraton Phuket Grand Bay Resort.

Last month, Mercurius said it will buy a 50 per cent stake in private Thai property developer Grand Bay Hotel for more than 335 million baht (S$14.69 million) from Apex, and then jointly develop the Sheraton Resort, with Grand Bay as the JV vehicle. The Sheraton Residence was not part of this JV.

On Friday, Mercurius announced Mr Tan's appointment in connection with the private equity fund. The firm said Mr Tan has more than 40 years of financial management experience in real estate funds or real estate investment trusts (Reits), as well as in the banking and information technology sectors.

From March 2017 to June 2018, he was the chief financial officer (CFO) for Sasseur Asset Management, which manages Sasseur Reit, a mainboard-listed real estate investment trust with retail outlet malls in China.

Prior to that, from July 2014 to April 2016, he was CFO of ARA Private Funds, with property investments in China, Malaysia, Hong Kong, Australia and South Korea. He was also the senior director of finance of ARA Trust Management (Suntec), the manager of Suntec Reit, from February 2008 to July 2014.

Mercurius said it will make further announcements of the fund where necessary and in due course.

The company requested a trading halt during Friday's midday break. After announcing the setting up of the fund, it asked for the trading halt to be lifted at 4.13pm.

Shares of Mercurius closed flat at 4.8 Singapore cents on Friday.

On Wednesday, Mercurius said it had used about S$1.49 million from the S$5.46 million net proceeds of its share placement, to pay the first instalment of the purchase consideration for its acquisition of the 50 per cent stake in Grand Bay.

Separately, in a June 20 filing, Mercurius said it received a deadline extension from the Singapore Exchange (SGX) till Aug 30 to demonstrate its business viability and retain its listing status.

Mercurius will be convening an extraordinary general meeting to obtain shareholder approval for the proposed JV, on SGX's advice. The company had previously consulted SGX, via its sponsor, on possibly not requiring shareholder approval, as both the firm and Grand Bay are in loss-making positions, as stated in its June 20 filing. (see clarification note)

The company's core business is in property development and investment.

Clarification note: An earlier version of this article stated that SGX had advised Mercurius to obtain shareholder approval for the proposed JV; it has been amended to clarify that Mercurius will indeed be convening a meeting to obtain such approval. An earlier version also incorrectly stated that Mercurius manufactures children's apparel, which is actually a business that has been discontinued; the article has been amended to reflect its current core business.