27th October 2016
EW Berhad, Tan Sri Liew & GuocoLand join forces to anchor Eco World International Berhad’s IPO
KUALA LUMPUR: Eco World International Berhad (“EWI”) today announced that GuocoLand Limited (GuocoLand) will be coming in as a strategic investor in EWI’s upcoming Initial Public Offering (IPO) together with Eco World Development Group Berhad (EW Berhad). GuocoLand intends to subscribe for such number of IPO Shares that will give it an eventual 27% stake in EWI – this is equivalent to the stake which will be owned by EW Berhad at the point of listing of EWI. The proposed subscription for a 27% stake each by EW Berhad and GuocoLand is to ensure that post-listing, EWI will have a minimum free float of at least 25% as stipulated under Bursa Malaysia’s Listing Requirements.
At present, Tan Sri Liew Kee Sin, the Executive Vice Chairman of EWI holds 246,540,798 shares in EWI representing approximately 99.9% of the unlisted entity. Pursuant to the IPO, EWI will be issuing up to approximately 2.153 billion new shares which are proposed to be allocated as follows:
|No of shares(‘000)||% of EWI’s enlarged PUC post-listing|
|Strategic Investors & co-Anchors
|Total no of New IPO Shares||2,153,459||89.7%|
|Tan Sri Liew’s Existing Shares||246,541||10.3%|
|EWI’s enlarged Paid up Capital (PUC) post-listing||2,400,000||100%|
The price at which the New IPO Shares will be issued has not been fixed – it will largely be determined by way of a book building process wherein prospective institutional and selected investors will be invited to bid for the IPO Shares. This process will be conducted by investment banks appointed in conjunction with EWI’s IPO.
Tan Sri Liew said, “I am delighted that GuocoLand will be joining us in EWI’s IPO. GuocoLand, which is a member of the Hong Leong Group, has a wealth of international property development experience, excellent reputation as savvy investors and great financial strength – this makes them the ideal partner for us to work with to take EWI to greater heights.”
“With both EW Berhad and GuocoLand on-board as strategic investors, EWI’s prospects going forward are very bright indeed. Apart from both groups’ proven track record of success in the real estate arena, they also have a very loyal and supportive community of followers. The combined impact of the EcoWorld and GuocoLand brands will therefore further enhance EWI’s already strong credentials and enable it to grow and extend its market reach much faster for the benefit of all stakeholders,” Liew explained.
Mr Raymond Choong, GuocoLand Group President and Chief Executive Officer said, “With a substantial exposure to Asia, GuocoLand has been on the lookout for investment opportunities in other markets. The UK and Australia property markets offer scalability, and we believe that with the right products and locations, they offer reasonable returns. Both London and Sydney are dynamic and vibrant global gateway cities.”
Mr Choong added, “We are delighted to partner a reputable developer EW Berhad in EWI’s upcoming IPO. EWI has four strong projects that have been well-received by the market and I am confident in the future growth prospects of EWI.”
On 27 October 2016 EW Berhad, GuocoLand and Tan Sri Liew entered into a Shareholders Agreement to regulate their relationship with one another going forward as major shareholders of EWI. The matters agreed include the following:
- EW Berhad’s agreement that it will maintain a 27% stake in EWI and Tan Sri Liew’s undertaking to ensure his, Liew Tian Xiong and Eco World Development Holdings Sdn Bhd’s combined shareholdings in EW Berhad will not fall below 30% during the tenure of the Shareholders Agreement – this ensures the continued commitment of both EW Berhad, its major shareholders and Tan Sri Liew to actively support and work together with the management team of EWI to ensure the continued growth and strong performance of EWI post-listing;
- The number of directors each party is entitled to nominate to the Board of EWI (3 persons by EW Berhad & Tan Sri Liew and 3 persons by GuocoLand) – the presence of a greater number of qualified and experienced individuals in the fields of real estate and corporate & financial matters pertaining to property development will further strengthen the oversight and governance structure of EWI post-listing;
Separately EWI also formalised the following agreements with EW Berhad:
- Subscription Agreement for Eco World Capital (International), a wholly owned subsidiary of EW Berhad, to subscribe for 27% of EWI’s enlarged paid-up-capital pursuant to the IPO, and
- Collaboration Agreement between EW Berhad and EWI.
The Collaboration Agreement sets the stage for mutual collaboration and strategic alliances between EW Berhad and EWI to achieve the common objectives of:
- Enhancing the “EcoWorld” brand name;
- Developing their respective capabilities and technical expertise and
- Increasing sales and growing market share in their respective territories of focus
The parties have also agreed that EWI will continue to focus on property development outside Malaysia whilst EW Berhad will concentrate on growing its development business within Malaysia. This clear delineation of geographical areas of operations will mitigate any potential conflict of interest situations which may arise between EWI and EW Berhad.
Dato Teow Leong Seng, President & Chief Executive Officer of EWI said “The agreements entered into today between EWI and EW Berhad as well as between EWI’s future major shareholders provide great clarity and a solid foundation for us to take the business forward. The management teams of EWI and EW Berhad have a long-established track record of being able to work together collaboratively to achieve outstanding results and we look forward to being able to forge a similarly strong and synergistic alliance with GuocoLand as our new strategic partner.”
Teow highlighted that EWI’s projects in both the UK and Australia have all performed remarkably well and initial concerns over the Brexit impact on residential property demand in London have largely abated. This was evidenced by the growth in sales EWI continued to experienced post-Brexit referendum which enabled cumulative sales (including reserved units) to reach £1,058 million as at 3 October 2016.
“We are pleased to report that we achieved £472 million sales (including reserved units) in FY2016 with close to 30% secured post-Brexit. This amount has also exceeded the £436 million recorded in FY2015 which is testament to London’s enduring appeal as a truly global city.”
Teow explained further that EWI’s customer profile, which is almost evenly split between UK-based property purchasers and its sizeable Asian customer base comprising investors from Malaysia, Singapore, Hong Kong and China, contributed to the strong post-Brexit sales results.
“The sharp depreciation of the sterling following the vote created a windfall opportunity for our Malaysian and Singaporean customers as well as Hong Kong and Chinese buyers keen to invest in London. Along with sustained interest from UK-based purchasers due to the three projects’ inherent appeal and unique selling points, this helped boost our sales post-Brexit,” he said.
“With all four projects already launched, sustained buyer interest and strong shareholders to support our expansion plans, EWI is well-positioned for growth once the IPO is completed. With an established developer GuocoLand as our partner, EWI can grow faster. I look forward to more collaboration with GuocoLand in the UK, Australia and potentially other markets,” Teow said.
Speaking on behalf of EW Berhad, Dato Chang Khim Wah, its President & Chief Executive Officer said “From the very outset it has been our intention to establish EcoWorld as a global brand – today marks a significant step forward in our strategic plans to truly internationalise not just the brand but also our future earnings stream. EWI’s four projects have performed remarkably well – upon completion of our subscription into EWI we will be entitled to consolidate a proportionate share of EWI’s profits – this will significantly broaden our earnings base to include income from beyond Malaysian shores.”
He also explained that the agreement with GuocoLand was one of the ways in which EW Berhad is implementing its partnership-for-growth business model to achieve accelerated growth for the Group and that the proposed investment in EWI will bring at least three immediate benefits to EW Berhad and its shareholders:
- enhancement of the “EcoWorld” brand on the international stage with opportunity for greater positive synergies to be reaped through the Collaboration Agreement;
- near-term profit growth through EW Berhad’s share of the locked-in earnings arising from the cumulative £1,058 million sales achieved by EWI and
- long-term profit growth as EW Berhad works in tandem with GuocoLand and Tan Sri Liew to support EWI’s expansion plans post-listing.