LSE listing paves way for overseas projects

By THE STAR

IREKA Corp Bhd (Ireka) is poised to undertake major property development projects overseas, in countries such as Vietnam, China and India, with the recent listing of its unit Aseana Properties Ltd (ASPL) on the London Stock Exchange (LSE).

The listing will enable the construction and property developer to “leapfrog” into the highly competitive Vietnam property development arena with a “war chest” of US$250mil, the amount raised from the listing.

”This (US$250mil) will give us the resources to undertake projects not only in Vietnam but also China and India,” Ireka Corp Bhd director Monica V.H. Lai told StarBiz.

Lai said the listing exercise would see the disposal of its entire shareholdings in wholly-owned Ireka Land Sdn Bhd and 60%-owned subsidiary ICSD Ventures Sdn Bhd to ASPL. ASPL has bought over a company called Amatir Resources that is developing Seni Mont Kiara.

Ireka Land’s ongoing projects i-Zen @ Kiara 1, Tiffani by i-Zen and the RM450mil One Mont’Kiara commercial development (all in Mont’Kiara, Kuala Lumpur), in which it has 50% interest, are placed under the ASPL umbrella.

Likewise, its Sandakan Harbour Square under ICSD Ventures now comes under the ASPL stable.

In return, Ireka will receive RM50mil cash and a 20% equity stake in ASPL Ireka’s property management arm, Ireka Development Management Sdn Bhd, will have a management contract with ASPL to manage the latter’s projects while its construction arm, Ireka Engineering & Construction Sdn Bhd, is expected to be involved in ASPL’s projects as well.

Ireka would not only have a steady income stream from doing business with ASPL but the large fund size would enable it to wield the financial clout so vital for entering the Vietnam market, Lai explained.

She said Ireka could get US$5mil a year from the 2% fee for managing the US$250mil cash at its disposal. However, it is targeting at getting the higher performance fee that comes from managing ASPL’s properties.

Why list on the London Stock Exchange and not Bursa Malaysia?

Lai said listing on the LSE took less than a year and this was important in entering the fast-moving Vietnam market where timing was crucial.

“We realise that in order for Ireka to grow, we have to leapfrog and change our business model. We are not only into property development but also into property management,” she said.

Ireka’s gearing had dropped from 4.04 to 0.18 with the sale of its Westin Hotel and its gearing had shifted from Ireka to ASPL, she added.

Ireka managing director Lai Siew Wah had, in December last year, said ASPL, which would have an initial fund size of about RM700mil, would enable Ireka to play a larger role in participating in and tapping the potential of the property sectors in Malaysia and Vietnam.

The listing would also reduce the group’s borrowings and strengthen its financial position.

Ireka Land president and chief executive officer Lai Voon Hon said ASPL, with a market capitalisation of US$250mil, was probably the first fund of its kind in South-East Asia.

Unlike a real estate investment trust that invests in completed properties, the ASPL fund can be invested in ongoing and yet to be launched projects.

“We are allowed by ASPL shareholders to invest up to 40% of funds in Malaysia. Yes, we will be looking at property development projects outside Mont’Kiara,” he said.

Ireka would be the main shareholder in ASPL with the 20% stake, he added.

Of ASPL’s five directors, two are prominent Malaysians. They are Datuk Mohammed Azlan Hashim and Datuk Ismail Shahudin.

On concerns about the ASPL listing, Voon Hon stressed that Ireka had not changed direction. “We’ve not moved out of the property development business. We’re still in this business but also managing a property fund and properties,” he said, adding that although Ireka directors were not on the ASPL board, “we are sitting on its investment committee.”

“We’re the sole manager of the fund. This is only the first step. We’ll continue to look for opportunities to manage other funds as well,” he added.

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