BY M. HAFIDZ MAHPAR
This 2013 file photo shows SRJK (C) Lai Meng at Jalan Ampang (the school has since been relocated to Bukit Jalil). The Lai Meng school land is one of Magna Prima's prized property assets.
KUALA LUMPUR: Hua Yang Bhd is forking out RM123.7mil to boost its stake in another property group, Magna Prima Bhd, which will result in it becoming the largest shareholder.
On Wednesday its wholly-owned subsidiary s signed a conditional share sale agreement to increase its shareholding from 10.84% to 30.06%, just short of the level that would mandate making a general offer.
In a statement on the same day, Hua Yang disclosed that the price tag for the additional 20.12% stake, comprising 66.89 million shares, was RM1.85 per share.
That is 20% higher than Magna Prima's closing price of RM1.54 on Bursa Malaysia on Wednesday. And the stock has gained slightly more than 15% since the start of the year.
About a third of the shares come from Fantastic Realty Sdn Bhd, which will slip a rung to become the second biggest shareholder after the completion of the proposed share sale.
The share purchase will turn Magna Prima into an associate of Hua Yang. Hua Yang’s equity interest in Magna Prima will be accounted for using the equity method in the company’s financial statements.
Magna Prima has some prime parcels of land, including the 1.06ha Lai Meng School parcel that is located close to the Petronas Twin Towers.
Based on the fair value and the net book value of Magna Prima's lands given in its annual report for the year ended Dec 31, 2015, the combined value of the lands is about RM580mil.
Earlier this year, after Hua Yang emerged as Magna Prima's substantial shareholder with a 10.84% stake, Magna Prima group managing director Datuk Wira Rahadian Mahmud Mohammad Khalil commented: “Hua Yang has built a name for itself and is well-known for its affordable housing projects.
“Magna Prima is known to be a luxury developer, but we also want to be in the affordable segment, given the current soft property market and weak consumer sentiment."
Hua Yang chief executive officer Ho Wen Yan, who was appointed as Magna Prima executive director on Feb 13, said in Wednesday's statement: “Subsequent to our initial acquisition, we foresee that there are significant opportunities and synergies between the two companies that we can further tap on to drive growth for our groups. Our decision to increase our stake is a reflection of this confidence.
“This move also reaffirms our commitment to strengthen the group’s presence in the Klang Valley. Although we already hold strategic landbanks in this region, this collaboration allows us to invest in existing landbanks that hold strong potential for growth, such as those in Jalan Ampang, Kuala Lumpur; Jalan Gasing, Petaling Jaya; as well as Section 15, Shah Alam. In the long term, this will positively impact the group’s earnings.”
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