SP Setia to raise RM3.6b to fund I&P Group acquisition

Sp Setia Bhd plans to raise RM3.6 billion via rights issue, rights issue of new class B Islamic redeemable convertible preference shares (RCPS-I B) and proposed placement of new shares to mainly fund the acquisition of I&P Group Sdn Bhd from Permodalan Nasional Bhd.

In a filing to Bursa Malaysia, SP Setia said it plans to raise proceeds of up to RM1.2 billion each from the proposed exercises.

The proposed acquisition of I&P Group cost RM3.65 billion, it said.

About RM2 billion from the proposed exercises would be used for the acquisition while the remaining would be from bank borrowings of RM1.5 billion as well as internally-generated funds of RM150 million, said the property developer.

The remaining proceeds would also be used for new and ongoing property development projects and general working capital requirements of the enlarged SP Setia Group as well as expenses relating to the proposals, it said.

Among the rationale for I&P Group acquisition, SP Setia said the former has 1,730ha of landbank in the Klang Valley and Johor Baru, which would complement and enlarge its existing landbank.

I&P Group’s landbank was also strategically located close to the vicinity of its existing projects in the Klang Valley and Johor.

“The proposed acquisition will also enable the SP Setia Group to leverage on the development potentials of the I&P Group landbank to boost its future growth in these key regions,” it said.

SP Setia said upon the completion of the proposed I&P Group acquisition and the proposed equity fundraising, the net gearing of the enlarged SP Setia Group will remain low and this will provide financial flexibility for the group to fund its future property development projects. — Bernama