Lim Kang Hoo third time unlucky

KUALA LUMPUR: Luck does not seem to be with tycoon Tan Sri Lim Kang Hoo, with his latest bid to merge Ekovest Bhd and Iskandar Waterfront City Bhd (IWC) frustrated by minority shareholders.
This comes on the heels of the lapse of the coveted Bandar Malaysia deal in May 2017 and the aborted merger between Iskandar Waterfront Holdings Sdn Bhd (IWH) and IWC in October 2017.
Minority shareholders of Ekovest were not sold on the idea of a merged Ekovest-IWC with 69.2% of them, representing 439.82 million voting shares, rejecting Kang Hoo’s proposal for the company to make an offer of RM1.50 a share for IWC at its EGM today.
Shares of IWC saw strong selling pressure after the aborted merger, slumping as much as 21 sen or 16.3% to RM1.08 today before closing 17 sen or 13.2% lower at RM1.12 on some 8.27 million shares done.
Ekovest’s share price, however, edged up 4 sen or 4.1% to RM1.01, with some 50.7 million shares changing hands.
Kang Hoo is the common shareholder of Ekovest and IWC with 32.37% and 38.35% stakes. As it is a related-party transaction, interested shareholders were not allowed to vote.
A visibly disappointed Kang Hoo, who is Ekovest executive chairman, lamented the deal would have gone through if not for it being a related-party transaction.
Ekovest managing director Tan Sri Lim Keng Cheng, who owns a 7.13% equity interest in the group, said no fresh bid will be made, stating that its focus would now be on its business operations.
“As the management, we respect the shareholders’ decision. We will not revisit the thing. We will go back to our core business and infrastructure expansion, in line with our Duke masterplan and River of Life project,” he told the press after the group’s EGM.
Keng Cheng reiterated that valuations for IWC were cheap, but acknowledged that valuations of the merged entity was a concern for Ekovest shareholders, with a preference to have two standalone listing entities.
Shareholders met by SunBiz said they were satisfied with the outcome of the EGM, stating that the merger would have complicated Ekovest’s corporate structure.
“We prefer something lean as it’s much easier to judge the company value,” said a shareholder.
Following the failed takeover bid, Ekovest has terminated the acquisition of a 6.4% stake in IWC from Kumpulan Prasarana Rakyat Johor Sdn Bhd for RM80.39 million cash or RM1.50 per share.
AmInvestment Bank Research slashed Ekovest’s FY19 and FY20 earnings forecasts by 26% and 21%, but raised its fair value to RM1.70 from RM1.35 with a “buy” call.
It said in a research note that Ekovest’s fundamentals remain solid without IWC given the strong construction earnings visibility underpinned by a sizeable outstanding construction order book of RM13 billion; sturdy recurring income from toll concessions till August 2069; and poised to capitalise on the next property upcycle with its landbank in the vicinity of the River of Life with an estimated gross development value of RM6 billion.
Separately, Kang Hoo declined to comment if Iskandar Waterfront Holdings has renewed interest in the Bandar Malaysia project after its partnership with China Railway Engineering Corp was terminated due to the failure to meet payment obligations.
The government has yet to announce the “winner” for the RM200 billion mega development thus far. China’s Dalian Wanda Group was said to be interested in the project, but it looked to have scrapped the plan after China’s restriction on investments abroad.