IOI Properties relisting by year-end

This is written by my colleague Lim Cian Yai.


PUTRAJAYA: IOI Corp Bhd will relist its property business on Bursa Malaysia under a RM12.8 billion deal by the year-end, adding to a post-election flurry of stock debuts. 

IOI Corp, the country’s fourth largest plantation company, privatised IOI Properties Bhd in 2009 in a RM1.3 billion deal, or RM2.60 per share.

“If everything goes right, the targeted relisting will be in December 2013,” said IOI Corp executive chairman Tan Sri Lee Shin Cheng at a briefing yesterday. Also present were his sons Datuk Lee Yeow Chor and Lee Yeow Seng, who are also directors in the company.

IOI Corp shares were suspended from May 9 till yesterday afternoon to facilitate the announcement of this exercise.

Once trading resumed at 2pm, IOI Corp’s shares jumped almost 7 per cent to a twoyear high of RM5.70. It gained 13 sen to close at RM5.46.

Under the relisting plan, IOI Corp will dispose of its entire 99.8 per cent stake in IOI Properties Bhd to a new entity for RM9.77 billion. This is in exchange for 2.8 billion shares in the new listing company called IOI Properties Group Sdn Bhd (ListCo).

The group will also sell other subsidiaries involved in property development to ListCo for RM2.63 billion in exchange for 589.27 million new ListCo shares.

IOI Corp will also sell 202ha of agriculture land in Rompin, Pahang, and 517ha in Segamat, Johor, to ListCo for RM276 million in return for 61.89 million new shares.

ListCo will also buy a 10 per cent stake in Property Village Bhd and another 10 per cent in Property Skyline Sdn Bhd from Summervest Sdn Bhd, which is controlled by Lee.

IOI Corp will also distribute one ListCo share for every three IOI Corp shares to eligible shareholders.

The exercise followed a proposed nonrenounceable restricted offer for sale (ROS) of 1.08 billion ListCo shares to selected shareholders on the basis of one ListCo share for every six IOI Corp shares at an offer price to be determined later.

The restricted offer of shares is expected to raise as much as RM1.8 billion to pare down the company’s borrowing.

“Barisan Nasional won in the general election, and everything is stabilising. That’s why during the last week, share prices have gone up. It’s a good sign,” Lee said. “I believe this is a good time for relisting. The property business is on a stronger footing now. We have built our landbank in strategic locations, so it is about time we unlock its value.”

Upon relisting, ListCo’s net asset value will grow from RM1.3 billion to RM14 billion, indicating more than a 10-fold leap.

Lee said the move is to streamline IOI Corp into two separate listed entities. "The relisting of IOI Properties on the Main Market will make it one of the largest listed property companies in the country," he said.

Lee reassured that he will continue to be executive chairman of the two entities, although there will be a chief executive officer for each of them.

As at January 2013, IOI Properties' market value stood at RM18.1 billion. As the underlying value of its property assets is unlocked, Lee is confident that ListCo will achieve operating profit of not less than RM1 billion per year in the coming three years.

In the year ended June 30 2012, IOI Corp's property segment registered RM704 million operating profit. "We project 50 per cent of income to come from domestic market and while another 50 per cent from overseas business," Lee added.

The property division has a total of 4,046ha here and overseas.

In the next three years, ListCo is expected to manage development projects with a total gross development value of RM16 billion.

It aims to achieve a more balanced ratio of 40:60 for property investment and development business in the coming five years. Currently, real estate investment business contributes 10 per cent to the overall property income.

Meanwhile, Lee expects palm oil prices to rebound to RM2,800 per tonne by year-end. Currently, it is trading at around RM2,300 per tonne at the Malaysian Derivatives Exchange.

"Fundamentals have been improving since last December. We have already seen the bottom and the only way is to go up," he said.

Malaysia's CPO inventory was high at 2.6 million tonnes last December. However, the stock level improved to 1.93 million tonnes as at last Friday.