Lim Seong Hai Capital secures 20-year concession to operate KL Tower, starts April 1

• Additionally, it will manage existing commercial facilities, including restaurants and kiosks, while retaining all related income.

KUALA LUMPUR (March 11): ACE Market-bound Lim Seong Hai Capital Bhd (KL:LSH) has signed a 20-year concession agreement to operate and maintain the iconic Kuala Lumpur Tower, after almost a year it first announced the contract win.

In a filing with Bursa Malaysia on Monday, LSH Capital said it has signed the concession agreement with the federal government, which will commence on April 1, 2025. 

The company stated that the concession was awarded to LSH Service Master Sdn Bhd (LSHSM), which is a 70:30 joint venture between its wholly owned subsidiary LSH BEST Builders Sdn Bhd and Service Master (M) Sdn Bhd (SMMSB).

SMMSB is a privately held Bumiputera company, specialises in mechanical and electrical (M&E) works and provides building maintenance services.

As part of the agreement, the government will receive 15% of LSHSM’s annual revenue.

Under the agreement, LSHSM has been granted exclusive rights to operate, manage, and maintain Kuala Lumpur Tower and its concession area. This includes refurbishment and maintenance work, security management, and facility management services.

LSHSM is also authorized to collect admission fees, generate revenue from commercial activities, and develop new facilities such as retail spaces, event venues, and parking areas. Additionally, it will manage existing commercial facilities, including restaurants and kiosks, while retaining all related income.

LSH Capital said the concession is not expected to have a significant impact on the group’s gearing, with operational costs estimated at RM10.3 million annually.

These expenses will be funded through internal funds and/or bank borrowings. Any required equity injection or loan guarantees will be shared between LSH Capital and SMMSB in proportion to their shareholding in LSHSM.

The company noted that the concession allows it to monetise KL Tower’s potential as a tourism and broadcasting hub while establishing facility management services as a new source of recurring income.

Additionally, the design and construction of ancillary facilities, estimated at RM70.2 million, are expected to boost LSH Capital’s current construction order book.

Shares in LSH Capital have been paused at 84.5 sen since March 7 on the LEAP Market, pending the completion of its transfer to the ACE Market.

The company is slated to list on the ACE Market on March 21.

KL Tower concession deal under scrutiny

To recap, in May last year, the federal government announced that LSHSM had been awarded the KL Tower concession for 20 years following a tender evaluation by the government and the Public Private Partnership Unit (UKAS).

According to Communications Minister Datuk Fahmi Fadzil at the time, the decision was made after reviewing tenders and proposals submitted through a request for proposal (RFP) process. He added that one of the government’s conditions was that all participating companies must have a minimum financial capacity of RM18 million.

KL Tower, a government-owned asset, has been under scrutiny since 2022, when the Malaysian Anti-Corruption Commission (MACC) launched an investigation into alleged irregularities surrounding its ownership transfer from Telekom Malaysia Bhd (KL:TM) to a lesser-known firm.

Previously, KL Tower was managed by Menara Kuala Lumpur Sdn Bhd, a subsidiary of TM. However, in October 2021, TM decided not to renew the concession, citing the tower’s shift from telecommunications services to a tourism and hospitality-focused operation.

In April 2023, Hydroshoppe Sdn Bhd director Abdul Hamid Shaikh Abdul Razak Shaikh was charged with offering RM500,000 annually for 15 years to then-Communications and Multimedia Minister Tan Sri Annuar Musa to fast-track the takeover of the KL Tower concession by his company.

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