Property News

[PuteriWorld]

Note Forest City close to Puteri Harbour. It is closer to 2nd link and offers better sea view. The Chinese developer is there for the long term and will release phase by phase to soak up demand in that area.

Forrest City hasnt been launched yet so I cant comment on that. Lets hope it dont become another R&F, Country Garden & Greenland where they launch thousands of units and shoot their own buyers later on

 

[Funniman]

Forrest City hasnt been launched yet so I cant comment on that. Lets hope it dont become another R&F, Country Garden & Greenland where they launch thousands of units and shoot their own buyers later on

Reclaimed land is very expensive and the infra system from roads, bridges, sewerage, electricity and water is extensive.
I can only see Forest City launching skyscrapers at very high upmarket units.

 

[cow138]

I concern about the impact of the reclamation works on the waterways at Puteri Harbour.

 

[sgcount]

I agree that Nusajaya is not really that big. The real game haven't even started. If one is not a risk-taker, I suggest him to put all the money into the bank. If one can wait 10-20 years and even use the houses for retirement, hold.

The usable area in Nusajaya ( exclude govt buildings, roads, CIQ, HSR stations ) are probably 10% the size of Singapore

How come useable space is only 10%? That's very small.

10-20 years is a long wait even for retirement. It's a huge risk to take as we are predicting Iskandar will take off well by then. But anything can happen and from past performances of the Malaysian authorities, we know how things can fail, delay or become abandoned. Also note that most Malaysian properties are poorly maintained after a few years. So 10 years or more later, no guarantee how the condos will look like!

LKY was right to some extent about the Malaysian govt when he warned about investing in Iskandar. His son Lee Hsien Loong looks to me to be the greedier one and so decided to invest in Iskandar. Look at many of the policies he passed down even in SG and u know he is the investor sort of politician who thinks of making money, even if it is at the expense of the commoners. Let's see if Temasek gets burnt in the next 5-10 years from its Iskandar investment.

Remember that malaysia's PM may not be Najib forever. Relationships may sour, their policies towards foreign investors like Singapore can also change "at the stroke of the pen". So it's definitely not a small risk we are talking about.

 

[Funniman]

I concern about the impact of the reclamation works on the waterways at Puteri Harbour.

I believed the reclaimation works started in 2007. It is done by a Singaporean company Yeng Tong Group who has 30 years experience doing many Singaporean reclaimation projects before. It is more about coastal dredging, reinforcing and shaping and construction of the marina. My classmate works for a company that supplies geotextiles to them for this project.

 

[FHBH12]

Forrest City hasnt been launched yet so I cant comment on that. Lets hope it dont become another R&F, Country Garden & Greenland where they launch thousands of units and shoot their own buyers later on

This one has the financial and political backing of Sultan of Johor.

Forest City's critics are jealous: Johor Sultan
Shannon TeohMy PaperMonday, Mar 23, 2015
http://news.asiaone.com/news/singapore/forest-citys-critics-are-jealous-johor-sultan

 

[PuteriWorld]

This one has the financial and political backing of Sultan of Johor.

Forest City's critics are jealous: Johor Sultan
Shannon TeohMy PaperMonday, Mar 23, 2015
http://news.asiaone.com/news/singapore/forest-citys-critics-are-jealous-johor-sultan

I heard Vantage Bay is also jointly controlled by Johor Sultan and his buddy. But when the property market is slow like now, even the Johor Sultan and his buddy dont dare to launch the bay.

 

[cybermad]

This one has the financial and political backing of Sultan of Johor.

Forest City's critics are jealous: Johor Sultan
Shannon TeohMy PaperMonday, Mar 23, 2015
http://news.asiaone.com/news/singapore/forest-citys-critics-are-jealous-johor-sultan

Even if Sultan backs it, they will still have to build very high density condos as they pay a lot to reclaim the land. I don't think I would like to stay there...

 

[PuteriWorld]

Even if Sultan backs it, they will still have to build very high density condos as they pay a lot to reclaim the land. I don't think I would like to stay there...

They say they want to build homes for 700,000 residents ( when entire JB population is 1 million plus )

Entire Jurong East/West/Central/Toh Guan/CCK Sporeans can squeeze into Forest City. Forest City can become like Singapore annex and Singaporeans who stay or work or travel there need not produce passports. Then they can succeed

 

[Relaxman]

They say they want to build homes for 700,000 residents ( when entire JB population is 1 million plus )

Entire Jurong East/West/Central/Toh Guan/CCK Sporeans can squeeze into Forest City. Forest City can become like Singapore annex and Singaporeans who stay or work or travel there need not produce passports. Then they can succeed

Yes.....Maybe all foreigners can only buy at forest city in future, a designated zone.

 

[Relaxman]

SP Setia cannot stand on its own now?
SP Setia top brass moots plan for its takeover by Sime Darby
Monday, 12 January 2015

KUALA LUMPUR: A high level initiative has started for a proposal for the property arm of Sime Darby Bhd to take over SP Setia Bhd.

The proposal was mooted by a few senior management of SP Setia about two months ago and conveyed to the top brass of Permodalan Nasional Bhd (PNB) and Sime Darby Bhd. PNB is the major shareholder of SP Setia as well as Sime Darby.

“So far, there has been no resistance to the proposal. It is not something out of the blue as this was talked about by the dominant shareholder.

“This time it is coming from the key people in SP Setia. They see a need for a strong leadership in SP Setia for the greater benefit of shareholders,” said a source.

The takeover is to resolve the current problem at SP Setia. The departure of its former president and CEO Tan Sri Liew Kee Sin on April 30, 2014 left a huge vacuum, which has gone increasing larger. The initial plan was to have the No. 2 and 3 – chief financial officer Datuk Teow Leong Seng and deputy president and COO Datuk Voon Tin Yow – at the helm post-Liew.

This did not happen. Instead, after Liew’s April departure, Teow, who was supposed to stay on until 2015, left on July 31, 2014.

Voon was left to hold the fort. It is uncertain how inclusive PNB was with Voon in its decision-making process. The fact that Voon also opted for an earlier check-out is telling.

An engineer by training, Voon, 57, assumed the position of acting president and CEO in transition on May 1, 2014. He was to stay on until April 20, 2015. He left at the end of December 2014. Although deputy president Datuk Khor Chap Jen is currently at the helm, taking over from Voon, the saga at SP Setia continues. Khor has been with the company about 20 years.

Speculation has been rife that PNB would appoint a new candidate from one of their companies but that has not happened. Among them was I&P Group Sdn Bhd CEO Datuk Jamaludin Osman, or one of PNB’s senior executives to replace Liew.

Since Liew’s departure, the company has grappled with a continuing series of outgoing leaders. Over the weekend, the company showcased some show houses as a preview into future launches in northern Setia Alam, part of SP Setia’s 2,525-acre flagship township. A Jan 9 press release said the company launched some landed properties in Setia Alam yesterday (Jan 11), its first property event since Liew’s departure.

Although the company is trying to go about with business as usual, PNB’s silence as what it plans to do with SP Setia has become deafening.

SP Setia has several projects on its books and need a strong leadership team to see them through, especially during challenging times.

Among them are the Battersea Power Station project in London where Liew is the key driver, and KL Eco City, in Bangsar, where SP Setia has a 50% interest.

“Battersea is a primary concern because they want to see it succeed and Malaysia coming out looking good,” said a source. Liew has always said it is a national project and he is the project’s best salesman.

As part of a massive regeneration project, Battersea was subsequently re-zoned as a Zone 1 location, a huge boost.

Liew is chairman of the Battersea Project Holding Co Ltd, the consortium leading the development of the London project. Teow, his former lieutenant. is chairman of Battersea Power Station Development Co Ltd. Other consortium members are Sime Darby and the Employees Provident Fund. SP Setia and Sime Darby have a 40% stake each with EPF, 20%. It is uncertain if Liew will continue to chair the consortium when his chairmanship concludes in September 2015.

The market has not been giving SP Setia its value since the departure of Liew. Prior to his departure, PNB had made a joint offer for SP Setia for RM3.95 per share. The offer was made with Liew. Since then the market has not accorded the same valuation to SP Setia. Sentiments had been weak on the stock even before the current bearish sentiments had affected the sector as a whole. It closed at RM3.35 on Friday.

PNB has a plan to merge all its property companies under its stable and list it. However the plan had not taken off yet although there were consultants who had worked on it quite substantially, a source said.

“But SP setia is not part of the plan,” said a banker.

“Any corporate exercise between the two companies would need shareholders approval,” said the banker.

Another source said that even if PNB were to amalgamate all these property assets, it would not solve the issue of a lack of resources to manage the huge amount of assets.

“If PNB does decide to amalgamate all its property assets, it must find a vehicle. This should not be an issue at all,” the source said.

SP Setia seems to have “a better branding” than the other property companies in PNB’s stable,” the source said. “The most pressing problem in SP Setia is not land or sales. It is management execution and PNB’s perceived inertia.”

Property sector watchers may want to take a leaf from history. In 2005, PNB surprised the market when it took over Johor-based Pelangi Bhd. Two years later, the state-owned fund bought over Petaling Garden Bhd, three days after buying out Island & Peninsular Bhd. The move created one of the largest property portfolios for the fund. In 2006, PNB created a new vehicle Synergy Drive Sdn Bhd to park its plantation assets when it amalgamated Kumpulan Guthrie Bhd, Sime Darby and Golden Hope Bhd, in what was to be the largest merger in Malaysia’s corporate history. Since the takeover, PNB has yet to show how it is reaping the benefits.

 

[Relaxman]

Recap the issue of SP Setia. Can we still trust SP Setia and invest in their properties?
-------------------------
SP Setia in leadership crisis

KINIBIZ -
Property developer SP Setia has yet to have a permanent replacement for long-time boss Liew Kee Sin, who left in April this year. Why is major shareholder PNB taking its time over such a crucial position for SP Setia?

____________________________________________________________________

Property developer SP Setia Bhd will welcome its third chief executive officer in just over eight months. But a permanent replacement for long-time chief Liew Kee Sin, who took a bow last April after nearly 18 years with the company, is still nowhere in sight.

Current acting president and CEO Voon Tin Yow, who had been Liew’s right-hand man at SP Setia since the very beginning, is leaving in December, earlier than when his one-year appointment expires in April next year. Stepping up would be current acting deputy president and chief operating officer Khor Chap Jen, though he would also assume the top post on an acting basis beginning January.

Voon’s departure as well as the lack of a permanent replacement is alarming, say analysts. “Surprisingly, the group has not appointed a permanent CEO till now which is disappointing,” said Public Bank in a research note last week.

The uncertainty appears to stem from major shareholder Permodalan Nasional Berhad (PNB), a government-linked Bumiputera fund management company. With nearly 64% of SP Setia shares, any CEO appointment would have to come from PNB.

However, PNB has strangely dawdled over the issue despite having had years to find an appropriate — and more importantly, permanent — replacement for Liew.

PNB had not responded to KiniBiz queries on the subject at press time. SP Setia declined to comment.

A strange takeover

The apparent instability in SP Setia’s senior management at present can be traced back to PNB’s hostile takeover bid of the company three years ago. In the aftermath of the takeover, Liew was set for an exit as PNB gained control of the SP Setia brand.

PNB launched a general offer of RM3.90 per SP Setia share after crossing the 33% shareholding threshold. However, the SP Setia board at the time balked at the offer, claiming that the offer “fundamentally undervalues” the developer.

News stories at the time reported that the company’s board see the company’s real value to be closer to RM4.20 per share.

Then in January 2012 PNB upped its offer to RM3.95 per share in concert with Liew, which translated into some RM6 billion in total. This raised PNB’s stake in SP Setia to just shy of 70%, held through its funds Yayasan Pelaburan Bumiputra and Skim Amanah Saham Bumiputera.

A pertinent point is that as part of the takeover PNB struck a deal with long-time CEO Liew whereby the latter would remain at the helm for three years following the latter — Liew left after two years.

“If I leave early, it lapses,” Liew was previously quoted as saying.

However, the decision to gain more control than the roughly 30% shareholding it had at the time in such a manner raised question marks among the industry, as PNB was already benefitting from SP Setia’s prominence being a major shareholder. Among others the questions revolve around whether such a move was necessary and whether it unnecessarily alienated Liew.

Market talk has it that even within PNB itself there were some who thought there was a better way of assuming greater control than the general offer approach, which faced resistance from Liew’s team and subsequently his exit along with key lieutenants.

“You would have to ask Hamad Kama (PNB CEO) on the reasoning (for the exercise),” said a corporate observer to KiniBiz.

Following KiniBiz queries over the issue, PNB CEO Hamad Kama Piah’s office informed KiniBiz that Hamad is currently outstation. KiniBiz phone calls to his mobile went unanswered.

Happy marriage gone sour

An important context is that PNB, among the largest investors in the market with about RM300 billion in net asset value, had played a role in SP Setia’s ascendance over the years as a major shareholder.

“PNB can make things happen,” opined a property industry observer to KiniBiz, asking anonymity. “Liew and Voon were the driving force but PNB contributed.”

By all accounts it seemed like a happy marriage for SP Setia with Liew and his team providing the entrepreneurial drive to charge forward while PNB, in the backseat, was perceived to have eased the opening of doors when necessary.

That is until the strange hostile takeover was launched, resulting in Liew’s eventual exit followed by Voon’s coming departure in December. This marks the end of an era in a way as, while SP Setia was not technically founded by Liew and Voon, both were seen as the ones who built up the brand.

Colleagues and accordingly regular lunch mates in a property development company in 1990, Liew and Voon — then 32 and 33 years old respectively — pooled their resources and struck out on their own with the acquisition of Syarikat Kemajuan Jerai Sdn Bhd, which owned 225 acres in Ampang. Six years later the company was acquired by SP Setia on a share swap basis and both men became directors of SP Setia.

It was then that they invited banker Teow Leong Seng, who helped finance their 1990 acquisition, to join them, eventually staying as a long-time chief financial officer until he tendered his resignation notice at the same time as Liew did in January this year. The rest is history.

“Liew and Voon built the company and were basically kicked out (following the takeover),” said a property market watcher. “Of course they would be bitter about it — SP Setia was their baby.”

However a counterpoint to this view is that Liew and Voon were never forced to leave in the first place: they could have chosen to stay despite PNB’s increased stake.

Indeed Liew was given an option, following the takeover, to sell his remaining stake of about 11% to PNB in several tranches at RM3.95 per share — an option no other shareholder were given. Prior to his exit in end-April, Liew sold his last block of 67.79 million shares on April 23, which translated into RM267.7 million in gains. On that day SP Setia shares were trading below RM3.00 on the stock exchange.

In addition Liew also remained chairman of the Battersea Project Holding Company Limited and also managing director of Qinzhou Development (Malaysia) Consortium Sdn Bhd until September next year after his resignation which was requested by SP Setia chairman Zaki Azmi in the interest of continuity. Liew remained chairman of the Battersea project despite surfacing in rival developer Eco World Development Group less than a week after his last day at SP Setia.

These events suggest that PNB had accommodated Liew somewhat following the takeover. However talk in some property circles is that there was simply bitterness over how the takeover was launched, taking Liew and company by surprise.

Liew himself had waved away questions on whether his relationship with PNB suffered following the takeover, though his comments hinted that there might have been some bitterness about it. Speaking in a radio interview last week, Liew noted that both himself and Voon, being together for 22 years, built “an empire”.

In an interview last year, Liew said things are cordial and quiet between both of them, saying the takeover chapter is closed now that the succession plan for his departure had been announced by the time of the interview.

“So I don’t want to talk about it anymore,” Liew was quoted as saying. “It’s over already.”

More recently Liew reiterated his position that the issue had been put to rest. In an interview with business radio BFM last week, Liew responded to a question asking whether he would work with his former partners again by saying life is about looking forward.

“If you keep going back and delve into issues that are in the past, you’re not going to go far,” said Liew in the interview.

When asked whether it hurt walking away SP Setia, Liew was vague. “You should have attended our farewell dinner about six months ago,” said Liew in the interview. “That would have been an experience which I did not expect from my people and myself.”

Liew did not respond to KiniBiz messages and phone calls to his mobile were unanswered.

Succession plan out the window?

However SP Setia’s succession arrangements for life after Liew had not exactly gone according to the plan that was approved by the board in March 2013,

SP-Setia buildingThe succession plan would have had then-COO and deputy president Voon stepped up to become CEO and president after Liew leaves these positions, while then-CFO Teow would shift up to take over Voon’s positions at the time.

However when Liew finally tendered his long-anticipated resignation notice in January this year, Teow also tendered his own resignation. Liew’s last day was April 30 while Teow’s final day was July 31.

In a filing to the stock exchange, Teow’s departure was attributed to a desire to pursue his personal goals.

Strangely, Voon was only named as an acting president and CEO for a one-year period between May 1, 2014 and April 30, 2015 while then-group executive vice president Khor was named acting deputy president for the same period.

While this seems a departure from the succession plan, SP Setia claimed otherwise.

“The appointments of Voon and Khor as acting president and CEO and acting deputy president are consistent with the management succession plan approved by the Board of Directors of S P Setia Berhad in March 2013,” said SP Setia.

Industry sources KiniBiz spoke to claim that the succession plan never intended for Voon to be a permanent replacement for Liew in any case.

However with Voon’s resignation well ahead of the appointment period’s end, it would seem that the succession plan is now approaching the next phase: a new, permanent, CEO.

While PNB had not named anyone yet, last October talk surfaced of Jamaludin Osman, who currently heads I&P Group Berhad, being among the candidates PNB was looking at to take SP Setia’s top post.

I&P Group is a non-listed property developer which PNB formed by privatising three listed developers between 2005 and 2007 for a total of RM1.34 billion.

However Jamaludin denied any knowledge of the matter, responding to a previous KiniBiz query by saying that he is “only an employee”. When contacted by KiniBiz at the time, SP Setia chairman Zaki Azmi also denied any knowledge.

“Sorry, I have not heard about it except from (the news reports),” said Zaki to KiniBiz in October last year.

More recently, some in the property circles do not think it is likely that Jamaludin would take over through a merger between SP Setia and I&P Group.

“Jamaluddin is not likely to take over,” opined a market watcher to KiniBiz, asking not to be named. “Likely no merger with I&P (involving SP Setia) too because they are two separate companies with different branding.”

Zaki did not answer KiniBiz phone calls to his mobile number.

What is PNB’s gameplan?

After having spent RM6 billion to gain control of arguably Malaysia’s foremost property development brand at the time, PNB’s delay in naming a permanent CEO to take control of SP Setia raises concerns.

Since no one had been named as a permanent CEO thus far, the indication appears to be that PNB had not found the candidate who ticks all the boxes yet despite having had two years to look for one.

The company itself seems in a fine position with good earnings visibility and well-located land banks — overall strong fundamentals. However the lack of a permanent replacement for Liew meant SP Setia has not had a clear direction in terms of strategy, nor has it had managerial stability.

For one, analysts feel this would continue depressing its share price if not worsen it.

PNB has spent some RM6 billion increasing its ownership in SP Setia to 64% from some 30%. But strangely it is lacking any kind of strategy after that but continues to allow a bleeding of staff, much of its to its new competitor in which Liew is playing a major role — Eco World. Why? And for how long will it let this situation continue?

 

[Valdez]

http://www.nst.com.my/node/84399?m=1

 

[FHBH12]

I think SP Setia has peaked in end 2013. The earnings are booked in 2015 as the projects launched under previous CEO start to VP. Its product lineup in JB was quite weak since 2014 (essentially direction less). 2016 could be a challenging year in JB for SP Setia. In contrast Eco World in 2014 had a great year.

 

[Relaxman]

I think SP Setia has peaked in end 2013. The earnings are booked in 2015 as the projects launched under previous CEO start to VP. Its product lineup in JB was quite weak since 2014 (essentially direction less). 2016 could be a challenging year in JB for SP Setia. In contrast Eco World in 2014 had a great year.

Very true. Without Tan Sri leadership.... SP Setia branding is going down and down. PNB hostile take over of SP Setia is a big mistake. Worst, PNB is not serious about solving leadership crisis in SP Setia. Is not about the money they have, is about people that are losing confident with the company. I already hear so many problems with the current ongoing projects by Setia. The recent hard selling of Setia Eco Garden, Eco Village and Setia Eco Cascadia projects proven that they are having problem selling their products now.

 

[Relaxman]

i wonder if relaxman aka cslong parks himself in front of the pc the whole day waiting for me to respond? kakaka. loser.

Stop behaving like huatgugu aka vokhster. If you are in self-denial, we can't help you. Learn to control your emotion and listen to others' view.

 

[cow138]

Malaysia really cannot make it.
On one hand they want foreign investors and then when they come now they are scared of them and want to push them into international zones and to restrict them.
When will we learn.
LKY is right After all.
Very disappointed.
Now I got agents calling me to buy. Last time also don't bother to entertain.
Market must really be bad.

 

[Relaxman]

Malaysia really cannot make it.
On one hand they want foreign investors and then when they come now they are scared of them and want to push them into international zones and to restrict them.
When will we learn.
LKY is right After all.
Very disappointed.
Now I got agents calling me to buy. Last time also don't bother to entertain.
Market must really be bad.

The Johor gov was just too lenient last time. They shouldn't allow foreigners to buy cheap JB terrace houses in the past. They only realised the mistake now. Lucky for those who manage to bought a landed property in the past. Setting international zones is not a bad idea at all.

 

[Relaxman]

Below is another interesting article from the past about SP SETIA ....
Seems that no one in PNB including SIME DARBY have to guts to lead the headless SP Setia......

October 4, 2013

SP Setia: PNB’s Dilemma

http://www.kinibiz.com/story/tigertalk

The way Tiger sees it, Permodalan Nasional or PNB is in quite a pickle. It has undertaken not to get involved in developer SP Setia’s management. But its President and CEO Liew Kee Sin may be moving to a rival and may well take others with him. Should PNB sit on its hands and do nothing in the meantime? If it were a Tiger, it won’t.

In the corporate jungle, Tiger goes by a number of rules. One of these is a simple one – if you don’t know what to do with a company you want to take over, then stay an investor and keep the stake below a level at which you don’t have to acquire a majority interest in the company.

If you do acquire majority control and ruffle feathers and more, and if top staff leave in droves, then be prepared to put your own people in at the apex, restore confidence and run the company as good or better than before.

SP Setia is Malaysia’s foremost property company and perhaps equally as famous is its President and CEO and one-time major shareholder Liew Kee Sin, widely credited with building up the company from scratch.

Unlike many other Malaysian tycoons, Liew and associates, the main ones of whom are Voon Tin Yow (currently his Deputy at SP Setia) and Teow Leong Seng (Chief Financial Officer), somehow did not keep majority control of SP Setia but steadily decreased their stakes. Both Voon and Teow are SP Setia directors.

That puzzled Tiger. Why would they do that? Tiger will have to go into the realm of conjecture and offer only possible answers. Perhaps there were other backers who preferred to exit and who were happy to sell to whoever was accumulating.

That somebody else who had been accumulating SP Setia shares was one of Malaysia’s largest funds Permodalan Nasional (PNB), and associated interests who by 2011 had acquired just under 33%, the trigger point at which a mandatory general offer would have to be made. At that time, Liew’s direct and indirect interests amounted to about 11%.

But things continued as per normal – PNB had two board representatives, less than interests aligned with Liew who had five at least. PNB and other government-linked funds, controlled over 50%, making SP Setia effectively a bumiputera company which gave it leverage to do land deals with the government. Crucially, management was firmly vested with Liew and associates.

And then PNB did something unwise and strategically confounding – itsetia-logo pushed its stake above 33%, triggering a mandatory general offer, which it duly made in September 2011 at RM3.90 a share. The floodgates were opened and the protests cascaded. Cries of backdoor nationalisation were heard, and in race-crazy Malaysia the not-so-soft whispers talked of Chinese businesses being taken over by Malay/bumiputera interests.

Tiger being apolitical and more than a bit naive here, wondered aloud: But was not SP Setia already Malay-owned? This was met with suitably disapproving glares which chastened Tiger, but only a bit, as Tiger has a distaste for racial politics.

PNB logoBut Tiger understood well the ramifications. Once PNB gets majority control, it will want board control and that may spell the end of independence for Liew and associates too. To put it bluntly, PNB’s hostile takeover bid evoked hostility too and that just would not do. What if Liew and gang just upped and left?

Tiger is not sure whether PNB thought about that and was prepared to move in. That would have been brave but reckless because none of PNB’s property units, Sime Darby included, had developed the kind of innovativeness, push, panache and marketing coupled with the delivery that SP Setia had. That is why the move was confounding. Why did PNB not attempt to make the takeover friendly?

Recall that at the time of that takeover, the election game was being played out and it just would not do to have Chinese resentment and voter backlash by letting the takeover go through in its format then. It was said that no less than the prime minister intervened to rectify matters.

So this takeover was aborted and another one put in place instead. The offer price was a mere five sen higher at RM3.95 a share. This time there were joint offerors – PNB, and yes, smart reader that you are you guessed it, Liew. It was silly to call it a joint offer because PNB would still be doing the buying.

The real difference was this: a management agreement which gave Liew total executive powers subject to board control in governance and strategic matters. And from what Tiger could see from an examination of the board composition, PNB’s numbers on the board have remained at just two post-takeover, less than those aligned with Liew which at that time would have amounted to at least five.

According to the management agreement, PNB’s involvement is only through its representation on the SP Setia board while day-to-day operations will be led by Liew for the tenure of the management agreement which is three years, unless his appointment is terminated earlier. Reports put Liew’s leaving date sometime in March 2015. The agreement was made in January 2012.

As an incentive for Liew to stay on, PNB gave a put option to Liew to sell his direct over-8% stake in SP Setia in three tranches over three years, effectively giving him a floor exit price of RM3.95 even if the price of the shares fell below that. The share price traded recently around RM3.20.

This was no incentive at all. As a joint offeror for the takeover of SP Setia, he should have been required to just keep the stake and take his chances with market movements. If he did well, he would reap the benefits from higher share prices.

As it is, Liew got the best of both worlds – a high exit price even if the share did not perform and management control to boot even if he exercised part of the options. His direct stake has been whittled down to below 3% from over 8% as he exercised his options but he is still firmly in the driver’s seat. How odd!

At the end of PNB’s revised offer (Tiger excludes Liew here because he was joint offeror in name only) it ended up, together with associate companies, owning nearly 70% of SP Setia, a management agreement which gave Liew total executive powers and for PNB still just two representatives on the board.

That’s a bum deal for PNB in every way – it has taken over the company but has absolutely no say in management and does not even have board control which implies no control over even strategic or governance matters. Again, how odd!

The hope was that Liew would do his utmost for SP Setia in the three years of the management contract. But other events overtook this, leading to serious questions of conflict for Liew which are yet to be resolved. It changed the game completely for SP Setia and PNB to the disfavour of both entities.

Less than a year after PNB’s takeover of SP Setia, a new and rapidly rising name in property emerged – Eco World Development which is making waves throughout the property circle. Note the “Eco” in it. Its main properties have the “eco” in it too – EcoSky, EcoBotanic, EcoBusiness Park etc.

That’s much like many of SP Setia’s higher end projects – Setia Eco Park, Eco City, Eco Glades, Eco Hills. It’s getting to be very difficult to differentiate one from another. In fact, Eco World is staffed by former top executives of SP Setia. Interestingly, Liew’s son, Liew Tian Xiong, at 22 and a 2012 graduate from Melbourne University, is on the board of Eco World.

Meantime, Eco World, together with Tian Xiong has already bought a 65% stake in listed developer Focal Aims at RM1.40 a share or some RM230 million and is making an offer for the remaining shares. Of the 65%, 35% (more than half) is owned by Tian Xiong and that would have cost about RM124 million.

Tiger says tender Tian Xiong cannot have that kind of money at his disposal – it must come from his father, don’t you think? In fact, that is confirmed in a Focal Aims announcement to Bursa Malaysia where Liew and his wife are listed as parties acting in concert for the offer for the rest of Focal Aims as financiers to their son Tian Xiong. The general expectation is for Eco World’s assets, which the company says have a gross development value of RM30 billion, to be injected into Focal Aims via a backdoor listing.

Eventually one can expect Eco World to become a major rival to SP Setia itself. And where would that place Liew?

Isn’t it time PNB satisfies itself as to what Liew’s intentions are? Shouldn’t Liew and PNB CEO Hamad Kama Piah Che Othman have a tete-a-tete and shouldn’t the latter ask the former whether he would stay on in SP Setia or follow his son?

Even if Liew gives his assurance, has PNB evaluated the situation to determine if that is reasonable and fair, to use a term that financial advisers are fond of? And if they have already had the conversation shouldn’t the investing public know the outcome?

And what about Battersea, the RM40 billion project in London? SP Setia and Liew lead this venture which is 40% owned by SP Setia, 40% by Sime Darby and 20% by the Employees Provident Fund. Shouldn’t Sime Darby and EPF be concerned about how Liew will handle this and indeed if he can given his potential conflicts?

Will PNB use its voting power to get additional representation on the board? Will it then make changes at the top and replace Liew with someone else who is demonstrably more committed and has no conflicts of interest?

If PNB does that, can it be sure that Liew’s two lieutenants still remaining in SP Setia, Voon and Teong won’t leave as well? These two have been with Liew for the last 17 years and helped him build SP Setia. Won’t their loyalties be with Liew too? Indeed, would PNB want these two to remain there without Liew? And if they stayed, how confident can PNB be that they will work for SP Setia’s interests?

When is PNB, through its various companies the largest owner of property developers and land banks in the country, going to push for in-house expertise and capability to be built within its various holdings instead of depending on other developers indefinitely?

PNB right now is well and truly pickled over this SP Setia and Liew dilemma. It’s damned if you do and damned if you don’t and sometimes it may be better to be damned doing then damned doing nothing at all.

Tiger knows PNB is no Tiger and the answers are a foregone conclusion. Which leaves this final niggling, disturbing question: What’s going to happen to SP Setia? What’s going to happen to Battersea?

 

[Relaxman]

who cares about jb? no, seriously. think about it. it's increasingly looking like a poisoned chalice anyway, especially for singaporeans. as for sps, look at the financials. look at sp setia connection via pnb now. it's no longer a chinese company, yes. but problems? i don't think so. btw, merging with sime darby is good news, but SD & SPS has denied it.
i always wanted a sime darby house.

Sad..... even sime darby have no balls to head the troubled SP Setia.....like a time bomb. SP Setia’s exposure and gearing is at dangerous levels.....what with the Battersea Hubris and Qingzhou-Kuantan JV on the pipeline. It is no surprise that the directors and top management cabut-lari, leaving the unborn fetus incubating with PNB’s oblivious minions.