SP Setia to finalise details of I&P deal next month

SHAH ALAM: SP Setia Bhd is in the midst of the due diligence process for the proposed acquisition of I&P Group and is on track to complete the exercise by year-end, said its executive vice-president and CFO Choy Kah Yew.
“We are at the stage of doing due diligence and conducting asset valuations. We hope by next month we can wrap things up but there’s a lot of work to do. We hope to wrap it up and make a detailed announcement next month,” he told reporters at its AGM yesterday.
Based on its estimated timeline, he said, an EGM will be held sometime in September to obtain shareholders’ approval for the proposed acquisition.
Choy said the final pricing will be within the RM3.5 billion and RM3.75 billion range as announced earlier and the enlarged entity will be driven by SP Setia.
“It will still remain a Setia group. Setia will always remain the main brand of the group, there’s no change to that. The I&P brand is also good, perhaps we will retain that for a different market segment. The I&P brand is very important to us but, group wise, it will still be the Setia brand,” he said.
Choy said the I&P brand will be retained to help the group penetrate new markets where SP Setia has not reached, for example, the Bukit Kinrara and Alam Sari markets where I&P has a strong presence.
He said the group already has plans for integration and does not anticipate any job cuts. I&P has some 300 employees while SP Setia has 1,800.
“We need people because these are talent in property development and they are specialists in township development which is very synergistic to us. They are people we really need because if you look at the scale, after the acquisition the land size is big so we do need people to roll out the projects,”Choy added.
SP Setia president and CEO Datuk Khor Chap Jen said post-acquisition, its Setia Alam township would have extra 400 acres, which would lengthen the development period of the project.
“For some of the areas like Semenyih, it would make us a very dominant player. We would have the scale of land to come out with very good infrastructure. For the standalone land, it would give us the opportunity to reach new markets,” he said.
Last month, SP Setia, Permodalan Nasional Bhd and Amanahraya Trustees Bhd entered into a non-binding memorandum of intent to start negotiations on the proposed acquisition.
Post-acquisition, the enlarged entity will have a combined landbank of close to 10,000 acres with a total gross development value of RM122 billion and total revenue of RM5 billion, making the group the third largest developer in Malaysia in terms of landbank size.
Khor said the group is confident of achieving its RM4 billion sales target based on the RM801 million sales it has achieved from January till April this year, which is higher than the RM696 million achieved during the same period last year, despite the first quarter being a seasonally slow quarter.
“Plus this year, we are expecting more contribution from overseas. Last year only 8% sales came from overseas, this year we have two new launches in Australia, which we hope will contribute more. This year we are expecting 20% sales contribution from overseas,” he said.
As at March 31, 2017, total unbilled sales stood at RM7.84 billion, anchored by 30 ongoing projects and a landbank of 5,141 acres with RM75.72 billion gross development value.
Shareholders approved a final dividend of 16 sen per share yesterday.