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In the first article of a series on EcoWorld Development and SP Setia, KiniBiz looks at the people who are behind the former. EcoWorld looks very much like a company, and a story, in the making with big names already being linked with it and a maze of links and connections.
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In a span of less than six months EcoWorld Development Sdn Bhd has acquired substantial land banks in Johor and tracts in the Klang Valley and Penang, and is now looking to buy a 65% block in publicly traded Focal Aims Holdings Bhd for RM230.7 million cash or RM1.40 per share.
At RM1.40 per share, the offer price is an 11% premium to Focal Aims’ net asset per share as at end June this year and almost a 54% premium to its last traded price prior to news of the takeover coming out.
The offer triggered a mandatory general offer for the remaining 35% not under EcoWorld’s control.
Interestingly, acting with EcoWorld is Liew Tian Xiong, eldest son of SP Setia Bhd president and CEO Liew Kee Sin (Liew). It is worth noting that Tian Xiong, 22, had only graduated from Melbourne University in late 2012 with a Bachelor in Commerce.
Additionally, Tian Xiong’s younger brother Tian Rong, who is currently pursuing an Economics degree from University London College, is also a contract staff at EcoWorld at the moment.
On the other hand, a look at the senior management team on EcoWorld’s website reveals a line-up of former SP Setia staff bar Tian Xiong, who despite being director holds no equity in the company.
Among them is EcoWorld chief executive officer Chang Kim Wah, who was previously part of SP Setia since 1994, becoming a board member in February 15, 2007. He resigned as executive director of SP Setia in April 2013, mere weeks after the announcement of the succession plan which would see Voon Tin Yow, SP Setia chief operating officer take over Liew senior’s position once he departs the company.
Another figure of note is Eddy Leong Kok Wah, who spent eight years at SP Setia between September 2005 to February 2013 before he resigned. Notably, Leong was appointed to EcoWorld’s directorship in June 2012. Leong is also an executive director at water player Salcon Bhd with a 13.8% total stake.
Who is behind EcoWorld?
While many analysts and market watchers are monitoring the developments closely, none are willing to comment as there is still very little clarity.
“It’s all being done super-fast. But I’ll need more clarity before I can comment,” a head of research from a bank-backed brokerage said when contacted.
There are also rumours speculating over the presence of powerful personalities behind EcoWorld. Some of the names that have cropped up include tycoon Syed Mokhtar Al-Bukhary and former Finance Minister Daim Zainuddin, among others.
Daim’s name surfaces as Focal Aims chairman is Mohd Razali Abdul Rahman, who is also the chairman of Daim-linked Peremba (M) Bhd.
Adding more weight to the Daim connection is the fact that one of EcoWorld’s directors and shareholders, Abdul Rashid Abdul Manaf — previously the chairman of SP Setia before his resignation in October last year — is known to be an associate of Daim.
Abdul Rashid was appointed to EcoWorld directorship at the same time as Leong in June 2012. His departure from SP Setia in October 2012 ended a 15-year association with the company.
It is also noteworthy that in the late 90s, Focal Aims was known as Sanda Industries Bhd and had its mainstay in manufacturing. Among its largest shareholders was Che Mohd Anuar Che Mohd Senawi, Daim’s nephew. Via Ekstra Juta Consolidated he held more than 15% of Sanda Industries.
On the other hand, Syed Mokhtar’s name surfaced as his vehicle DRB Hicom Bhd had sold EcoWorld a 613.79-acre tract of land in Johor for RM 534.7 million in April this year. In end December 2008, DRB Hicom had acquired the tract which was part of a 1,500 acre plot in Johor, for RM722.5 million.
Another property developer said, “Syed Mokhtar is not known to sell any assets…let alone prime pieces of land. He must be a partner or else how could EcoWorld have pulled off such a coup?”
But then again Syed Mokhtar’s name generally surfaces everywhere these days.
Uncertainties, unanswered questions
So while details of what EcoWorld and Liew junior have planned for Focal Aims are scarce, without a doubt the deal has raised many questions, chief among them being Liew senior’s involvement in the takeover and whether he will be involved in EcoWorld.
Liew Kee Sin
When contacted by KiniBiz, Liew senior denied involvement. “I am not involved. It is my former directors (and not me).”
However, Liew had previously gone on record saying that he would not stay at SP Setia past March 2015, though some expect his departure to occur by 1Q14.
“I want to retire, enough of work!” said Liew senior via SMS when pressed whether EcoWorld will prove to be his destination after his time at SP Setia ends.
But bankers say that he is behind EcoWorld and that he has been meeting financiers, to set EcoWorld on a strong footing, possibly before he comes on board.
Other than the entry of the older Liew, there are other doubts.
The head of research from the bank-backed brokerage said that he’s doubtful about the gross development value (GDV) of RM30 billion for a 3,000-acre land bank, which works out to about RM10 million per acre.
“I’ll need some clarity before I comment,” he said.
Another head of research however said that the RM30 billion figure was understandable as it was likely to be high-end development.
Perhaps even more glaring than the unanswered questions is scepticism.
An analyst questions the selection of Focal Aims.
“Other than Kota Masai (where the company has some 2,500 acres) its’ not a very prominent company. Kota Masai (development) has been ongoing for many years, maybe 10 years,” said the analyst.
Other than Kota Masai, Focal Aims also has a small high-end development in Glenmarie, dubbed Saujana O-Lot.
A fund manager however highlights that an initial public offering (IPO) by EcoWorld would likely be difficult considering the looming uncertainty, with real property gains tax and the current damp market sentiment.
“This way its cleaner, nobody will touch a property IPO with the uncertainties involved,” he said.
For its nine months ended June this year, Focal Aims registered net profits of RM24.2 million from RM112.3 million in sales. Earnings per share (EPS) for the nine months in review was 9.57 sen.
As at end-June Focal Aims had cash and cash equivalents of RM12.1 million. The company’s short-term borrowings stood at RM45.5 million while its long-term debt commitments were RM10.3 million.
Nevertheless, the weak earnings and balance sheet may not mean anything once the new management come in and roll out their plans.
Some of the personalities involved:
Liew Kee Sin, president & chief executive officer (54 years old)- CEO since May 3, 1996 after he and Voon (COO) took over SP Setia
- Will depart by 1Q15 at the latest (on record saying “will not stay past March 2015”)
- Owns direct interest of 2.76% as at June 3, 2013, Permodalan Nasional Bhd controls close to 70% of SP Setia
- On record to KiniBiz saying he wants to retire after SP Setia
Liew Tian Xiong, director (22 years old)
- Graduated from Melbourne University (2012) with Bachelor in Commerce.
- Director but does not own equity in Eco World
- Named as buyer for 65.05% of Focal Aims along with Eco World – where is the money coming from?
- His younger brother, Tian Rong, is currently a contract staff with Eco World while pursuing an Economics degree from University London College.
Chang Kim Wah, chief executive officer (48 years old)
- Joined SP Setia in 1994, becoming board member on Feb 15, 2007. Resigned as executive director on April 1, 2013. (6 yrs)
- His resignation came weeks after succession plan of Voon replacing Liew was announced mid-March.
- Was the executive vice-president in charge of the southern and northern property divisions of SP Setia, including the Singapore and Indonesia offices.
Abdul Rashid Abdul Manaf, director (65 years old)
- Board chairman of SP Setia from March 12, 1997 to October 25, 2012 (15 years)
- Appointed to Eco World (and two other companies’) directorship on June 4, 2012
- Main shareholder of Eco World
Eddy Leong Kok Wah, director (58 years old)- Was in SP Setia’s remuneration committee from Sept 21, 2005 to Feb 28, 2013 (8 years)
- Appointed to Eco World (and two other companies’) directorship on June 4, 2012
- Main shareholder of Eco World, banker background (member of Institute of Bankers UK)
- Executive director of Salcon, owns 13.847% direct+indirect interest as at July 4, 2013
Tomorrow: KiniBiz looks at fast growing EcoWorld and its large land bank
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