KUALA LUMPUR (Aug 26): IJM Corp Bhd has secured shareholders’ approval at the annual general meeting for disposal of its entire 56.2% stake in IJM Plantations Bhd (IJMP) to Kuala Lumpur Kepong Bhd for RM1.53 billion cash.

IJM said in a statement today that the proposed transaction fits its strategic focus to streamline its construction-property-industry-infrastructure related businesses.

This enables the group to establish a more efficient business structure that will accord the company better value appreciation by the market, narrowing the conglomerate discount, it said.

It also said proceeds of the sale is sizable and would enable the group to pursue new growth opportunities, fund existing working capital or capital expenditure requirements, and reward shareholders by way of a special dividend, as well as share buyback activities – further enhancing value to shareholders.

Of the proceeds, RM800 million has been earmarked for capital management activities, which includes an indicative special dividend amounting to RM542 million, or 15 sen per share – which it had proposed earlier – as well as a share buyback programme.

“The declaring of the special cash dividend to shareholders is expected to coincide with the release of IJM’s second quarter of FY2022 financial results in November 2021,” it said.

An immediate one-off gain from the disposal, which it previously put at RM700 million, will be recognised by IJM in the second quarter ended Sept 30 (2QFY22).

Meanwhile, IJM said the financial performance of the construction, property, industry and infrastructure divisions should recover in the second half of FY2022, when operational activities are recommencing.

Given the economic outlook and the competing priorities of government finances, the group anticipates that Private-Finance-Initiative (PFI) types of infrastructure spending will likely have to increase to revitalise the economy.

“With a strong balance sheet, track record and experience in developing PFI projects, IJM will be well-placed to participate in a recovering economy,” it said.

The group’s construction division’s outstanding order book as at March 31, 2021 was RM4 billion. The division has since secured three projects amounting to RM586 million in FY2022, and targets to replenish the order book by RM2 billion this year.

“This will hinge on the revival of infrastructure spending as part of the Malaysian and Indian government’s economic recovery plans,” it said.

IJM shares closed one sen or 0.53% higher at RM1.88 today, valuing the group at RM6.71 billion.