SP Setia becomes sole owner of Bangsar land

PETALING JAYA: SP Setia Bhd today acquired the remaining 50% stake of Setia Federal Hill, which owns 51.57 acres of leasehold land in Bangsar, from Mekar Gemilang Sdn Bhd for RM431.89 million cash.
The group said the price is a premium of 10.9% to the unaudited adjusted net asset value of Setia Federal Hill as at Dec 31, 2017 of RM778.64 million.
The purchase is expected to be funded via cash proceeds from the issuance of Islamic Redeemable Convertible Preference Shares (RCPS-i A) by SP Setia, which was completed on Dec 6, 2016, and/or bank borrowings.
Setia Federal Hill is a joint venture company, which was established to undertake a development project on the land, held equally by SP Setia and Mekar. The land was obtained via a privatisation agreement in 2012 involving a land swap with the government, in return for the transfer of 41.5 acre land in Setia Alam for the the planning and development of a health research facility complex and construction of a clinic and 24 apartments in Bangsar.
The land is planned for an integrated development project, which comprises residential and commercial components and a mall with a gross development value of RM20.19 billion over a 15-year period.
“The proposed acquisition is expected to enhance the consolidated net assets of SP Setia Group and net assets per share of SP Setia in the future in view of the potential future profit contribution arising from the proposed development on the land.”
In the event the purchase is partially funded via bank borrowings, the gearing of the SP Setia Group will potentially increase.
The exercise would require approval from the Public Private Partnership Unit and if required, the Economic Planning Unit, to effect a change in the shareholding and equity structure of Setia Federal Hill. Barring any unforeseen circumstances, the application to the relevant authorities in relation to the proposed acquisition is expected to be made within one month.
The exercise is expected to be completed by the third quarter of 2018.