This article first appeared in The Edge Malaysia Weekly on January 15, 2024 - January 21, 2024

In 2016, Yeoh Jin Hoe realised a substantial amount of his investment in mattress manufacturer King Koil, when he divested a 60% stake to Kumpulan Perangsang Selangor Bhd (KPS) for RM115.93 million.

The transaction then valued the entire King Koil at RM193.2 million. Yeoh, a low-profile investor, had effectively cashed out a major portion of his stake in the mattress manufacturer, leaving the lion’s share of the company to KPS.

The scepticism then was how Selangor state government entity KPS would draw more value from King Koil as the mattress business has low barriers to entry, but requires smart marketing and it would take time before the fruits of one’s labour can be realised.

Last week, KPS’s strategy to purchase a substantial interest in King Koil, with Yeoh holding a 40% block, paid off when the company entered into an agreement to dispose of its 50% stake in Kaiserkorp Corp Sdn Bhd, which holds the King Koil mattress business, to a Hong Kong-based fund for RM265.48 million.

At the same time, Yeoh will also dispose of 30% to Hong Kong-based AI Dream 3. The deal will effectively leave KPS and Yeoh with 10% each in Kaiserkorp.

But that is not the end of the story.

AI Dream 3 has an option to deal with the remaining 20% within two years; it also has a “drag along” clause — a provision that enables the majority shareholder to pull the minority shareholder into a sale — should the fund find a buyer.

The transaction with AI Dream 3 effectively values the King Koil business at RM531 million, which is a huge premium compared with the 2016 valuation of RM192.2 million. And there is still more upside for Yeoh and KPS as AI Dream 3 is likely to create more value before disposing of Kaiserkorp.

The 72-year-old Yeoh is no stranger to the corporate world, having been a substantial shareholder of a number of listed companies, including Alcom Bhd and Can-One Bhd. His acumen for spotting good opportunities was proven when he took over Kian Joo Can Factory Bhd, which was then a bigger rival in the can manufacturing business.

KPS has stated that it intends to reward shareholders from the sale proceeds. As for Yeoh, he continues to reap the benefits from his shrewd investments in the mattress business.

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