The EPF may buy some SP Setia placement shares but not Sime Darby

SHAH ALAM (Nov 23): The Employees Provident Fund Board (EPF) may be among institutional investors to take up SP Setia Bhd placement shares but not Sime Darby Bhd.

“The EPF may buy more shares… Sime Darby is our partner in Battersea but I don’t think they are interested [in the placement shares],” SP Setia’s president and CEO Tan Sri Liew Kee Sin told reporters today after shareholders passed the proposed placement exercise of up to 15% of SP Setia’s share base to raise about RM1 billion to fund expansion and pare debt.

The EPF and Sime Darby are SP Setia’s partners in the gargantuan London Battersea Power Station redevelopment project that boasts a RM40 billion gross development value (GDV).

The EPF owns 5.13% of SP Setia as at Nov 20, filings showed.

On the share placement exercise, Liew said Maybank Investment Bank Bhd have identified the institutional investors to take up the shares.

The placement shares will not be underwritten and will be placed out in a single tranche, according to its circular to shareholders.

In theory, a third party can take up the entire 15% block of shares, Liew said, but added that no one shareholder would get a big block as the goal for the exercise is also to increase SP Setia’s free float.

The actual number of placement shares issued will range between 300.81 million shares and 322.69 million shares depending on the number of options and warrant are converted into ordinary shares ahead of the exercise.

At the illustrative price of RM3.60 per share, between RM974.6 million and RM1.05 billion could be raised from the placement to fund its ventures abroad and pare debt. Of the amount raised, some RM350 million will go to partially fund its involvement with the London Battersea Power Station development project. Some RM200 million will go to pare debt, another RM200 million will go to its Qinzhou Industrial Park, China joint-venture.

The remaining proceeds of at least RM214.6 million will go to fund its newly launched and upcoming projects including the 1 National Institute of Health Complex in Setia Alam, Fulton Lane Australia, PARQUE Melbourne in Australia, Setia EcoHills Semenyih and Eco Sanctuary in Singapore, its circular read.

The share placement exercise will reduce Permodalan Nasional Bhd (PNB)'s stake from 51.51% to between 44.79% and 46.56%, depending on the level of options and warrant conversion prior to the placement, according to the circular.

Skim Amanah Saham Bumiputera's holdings will be diluted from 18.49% to between 14.99% and 16.08%.

Liew's holdings, meanwhile, will be diluted from 5.63% to between 4.2% and 4.9% -- below the 5% threshold for substantial shareholding.

It is not immediately certain whether Liew intends to buy more shares from the open market but SP Setia’s stock price slid when Liew pared his holdings in June this year.

The 53-year old former banker credited for having steered SP Setia into a leading property developer in Malaysia, sold a 2.35% block to PNB in June this year for RM178.53 million or RM3.95 apiece.

The deal that pared Liew’s holdings to 5.88% was pursuant to an option granted to Liew by PNB who became SP Setia’s single largest shareholder after mounting a takeover late last year.

In January this year, PNB revised its takeover offer from RM3.90 to RM3.95 after its surprise initial offer met with resistance from SP Setia’s management. The takeover closed after PNB roped Liew into its bid and announced that Liew would stay on with the company for at least three years. Analysts had previously named Liew’s exit from SP Setia as a reason to de-rate the developer.

At 4.31pm today, SP Setia was unchanged at RM3.40 apiece.

At today’s media briefing, Liew downplayed his significance to SP Setia, though.

“SP Setia is not a one man show. There is sometimes over-emphasis on me but our success is not mine alone, it is everyone in the company playing a part… To me, [the contract] is not an issue at all because our focus here is on delivering the best and we know for a fact that we are performers.”

On the recently aborted employees share option scheme (ESOS) proposal, Liew said a new performance-based scheme is being studied as a way to reward employees and could be up for approval by shareholders at the company’s annual general meeting in February 2013.

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