S P Setia’s I&P buy and rights issue deemed as fair and reasonable — Affin Hwang

KUALA LUMPUR (Oct 25): S P Setia Bhd’s proposals to acquire I&P Group Sdn Bhd for RM3.65 billion and raise gross proceeds of up to RM2.4 billion via rights issues, are fair and reasonable, and not detrimental to the minority shareholders, said independent adviser Affin Hwang Investment Bank Bhd.

“Accordingly, we recommend that you (shareholders of S P Setia) vote in favour of the resolutions pertaining to the proposed I&P acquisition and proposed rights issue to the tabled at the forthcoming extraordinary general meeting,” Affin Hwang said in a circular filed with Bursa Malaysia by S P Setia.

Affin Hwang said the proposals are reasonable, as S P Setia will be able to strengthen its market position in property development, while providing synergistic benefits in terms of proximity of location, broader range of customers and greater operational efficiency.

“The shareholders of S P Setia stand to benefit from the potential income to be generated from the enlarged entity’s property development in the medium to longer term,” the independent adviser added.

Currently, S P Setia has a total landbank of 5,452 acres, with a potential development that could yield a gross development value of RM80.03 billion. Upon completion of the acquisition, its landbank will increase by 78.43% to 9,728 acres, thus making it the third largest property developer in the country.

As for the purchase of properties within I&P, Affin Hwang Capital said the values ascribed by S P Setia’s independent valuers are fair, with the assumption and bases used in the methodology deemed as reasonable.

To recap, S P Setia had on June 22 announced its plan to acquire I&P Group to strengthen its footing in the property development scene.

To fund the purchase, S P Setia had proposed a rights issue of ordinary shares and Class B Islamic redeemable convertible preference shares, and placement of new  SP Setia shares. Each of the proposals is expected to raise up to RM1.2 billion in gross proceeds.

S P Setia said 54.8% of the I&P purchase will be settled via equity, 41.1% will be satisfied by debt and the remaining 4.1% will be done via internally-generated funds.
 
Shares in S P Setia, a real estate company controlled by Permodalan Nasional Bhd, dropped six sen or 1.79% to close at RM3.29 today, giving it a market capitalisation of RM9.94 billion. — theedgemarkets.com

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