Singapore-based steel trading company Albedo has agreed to a S$774 million reverse takeover (RTO) with a company controlled by Malaysian tycoon Danny Tan that will likely transform Albedo into a major property developer in Iskandar Malaysia.
Under the conditional sale and purchase agreement, Albedo will acquire Reflections Oasis, a wholly-owned subsidiary of Tan’s Infinite Rewards, which is in the process of purchasing seven parcels of land in Gelang Patah, Johor.
Albedo plans to fund the acquisition by issuing 4.55 billion of new shares at 2.24 Singapore cents per share, or about 95 percent of Albedo’s enlarged issued capital.
To be developed into commercial, industrial and/or residential use, the land has an aggregate market value of around RM2.71 billion (S$1 billion) as of 30 August, based on an estimate by Knight Frank Malaysia.
Albedo and Infinite Rewards are also negotiating for the purchase of two additional plots.
Meanwhile, Albedo said that “it expects its existing core steel trading business to remain challenging as increased competition and softening demand for steel related raw materials continue to erode profitability. The proposed acquisition will provide an opportunity for the Company to participate in the growth of Iskandar Malaysia”.
“Albedo believes the strong track record, business network and experience of Tan Sri Dato’ Danny Tan and his business associates, combined with the development potential of the properties, will provide the group with the platform, synergy and scale it needs to transform into a major property developer in Iskandar,” the company added.
Religare Capital Markets continues to see a steady inflow of investments into Iskandar, and “this latest transaction is likely to provide another avenue for investors looking for Iskandar plays”.
“Iskandar’s price relative to Singapore remains very affordable, and this could likely continue to drive investment demand there,” noted Religare.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories email firstname.lastname@example.org