EcoWorld takes full control of Puncak Alam-based developer after buying out EPF's 40% stake

• Following the acquisition, EcoWorld Malaysia will fully consolidate Paragon Pinnacle’s balance sheet — instead of the 60% share of results previously.

KUALA LUMPUR (Feb 18): Eco World Development Group Bhd (EcoWorld Malaysia) (KL:ECOWLD) has taken full control of a firm developing properties in Puncak Alam by acquiring the Employees Provident Fund's (EPF) 40% stake in the firm.

The firm, Paragon Pinnacle Sdn Bhd, is the developer of mixed residential-commercial development Eco Grandeur and integrated business park Eco Business Park V in Puncak Alam. EcoWorld Malaysia owned a 60% stake, while EPF’s wholly owned unit Tanjung Wibawa Sdn Bhd controlled 40%.

According to a bourse filing on Tuesday, Tanjung Wibawa exercised a put option to require EcoWorld Malaysia to acquire Tanjung Wibawa’s 40% stake in Paragon Pinnacle for RM184.08 million.

Following the acquisition, EcoWorld Malaysia will fully consolidate Paragon Pinnacle’s balance sheet — instead of the 60% share of results previously.

“The acquisition is thus akin to acquiring two new projects that can immediately contribute to the group’s profit and cash generation, without the usual pre-launch market uncertainties or execution risks," EcoWorld Malaysia said.

“In addition, the projects are located in a high-growth development corridor where the group has already established a strong brand and customer following as attested by the cumulative sales of RM4.4 billion as at Oct 31, 2024 — achieved in just eight years since the development’s (Eco Granduer) first launch in November 2016,” the group added.

The undeveloped land bank of Eco Grandeur stood at 767 acres, while Eco Business Park V’s was at 275 acres, representing an aggregate remaining gross development value of RM9.5 billion, according to EcoWorld Malaysia.

Of the acquisition consideration, RM124.55 million comprised payment for principal of remaining shareholder advances from Tanjung Wibawa, and RM59.53 million as a “top-up” yield to meet the “fixed mutually agreed” internal rate of return of Tanjung Wibawa’s total investment. 

EcoWorld Malaysia said the acquisition was internally funded. The group’s cash stood at RM560.65 million with total debt of RM2.26 billion as at end-October 2024.

The group formed the joint venture with the EPF in November 2016 to undertake both development projects — Eco Grandeur and Eco Business Park V. Under the deal, Tanjung Wibawa subscribed to a 40% stake in Paragon Pinnacle and provided shareholder advances of RM367 million to fund the developments.

Tanjung Wibawa was granted a put option to require EcoWorld Malaysia to acquire its shares in Paragon Pinnacle. The option was exercisable eight years after Paragon Pinnacle’s first utilisation of Tanjung Wibawa’s advances to the joint venture. 

Shares in EcoWorld Malaysia ended eight sen or 4.35% higher at RM1.92, valuing the group at RM5.69 billion.

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