This article first appeared in The Edge Malaysia Weekly on December 30, 2024 - January 12, 2025

ANOTHER year has come and gone and the much-talked-about listing of Iskandar Waterfront Holdings Sdn Bhd (IWH), which is substantially owned by business tycoon Tan Sri Lim Kang Hoo, has yet to materialise.

A decision on an elaborate proposal to reorganise and streamline Lim’s companies and assets that was first announced in September 2023 has been postponed to January 2025. This is to give the parties involved more time to deliberate and assess the proposal.

The reorganisation and streamlining exercise involves Lim’s Ekovest Bhd (KL:EKOVEST), IWH, Knusford Bhd (KL:KNUSFOR) and Iskandar Waterfront City Bhd (KL:IWCITY). Lim has a substantial stake in all the four companies, which are generally involved in property development and construction.

He holds close to 28% of Ekovest and 32% of Knusford. Through private company Credence Resources Sdn Bhd, Lim holds 63.1% of IWH, which is not listed. IWH in turn holds 34.3% of the listed IWCity. The minority partner in IWH is Kumpulan Prasarana Rakyat Johor (KPRJ), with close to 37% equity interest.

The proposed reorganisation is to rationalise the operations under separate distinct divisions. But more importantly, it would facilitate the reverse listing of IWH, a company that is asset-rich but with a business model of landbanking that tends to see lumpy but unpredictable revenue.

In 2024, there was little progress in the reorganisation and merger exercise that would see Ekovest take over a 70% stake in IWH and emerge as the property arm of the companies under Lim. The transaction values the entire IWH at RM1.6 billion.

After Ekovest takes possession of Lim’s stake in IWH, there would be a merger of assets between the latter and IWCity.

The merger would in effect enable Lim to monetise a huge land bank in Johor through the placement of his shares. IWCity, with the assets of IWH, can even issue bonds to match its long-term strategy of unlocking the value of its land.

As for Knusford, it is to acquire the construction arm of Ekovest for RM450 million and eventually become the construction arm of the group. All the transactions are to be done via shares.

The reorganisation needs the approval of shareholders and the Securities Commission Malaysia (SC), among others. Generally, the authorities look at the valuations and sustainability of the business model.

In the case of Lim’s business empire, the scrutiny is more on IWH.

As far as valuations are concerned, the reorganisation proposal unveiled in October 2023 stated that Ekovest would buy 70% of IWH for RM1.15 billion, a figure that was based on the net asset value of IWH as at Dec 31, 2022. The value is notably lower than that reported previously where the value of IWH  was tagged at RM2.7 billion.

Apart from valuations, IWH’s unique business model has somewhat made the deal different from other property-related transactions.

IWH is a landbanking company that is backed entirely by assets. IWH’s asset is its 3,250 acres of land in Iskandar Malaysia and another 962 acres held by its associate company, IWCity.

IWH’s business model is similar to that of a master developer. It is planning the development of the vast tracts of land in its stable. Meanwhile, its clients are local and foreign property developers who will purchase the parcels for development.

The IWH business model of landbanking is new to the Malaysian capital market, which could be a reason why the proposed reorganisation is taking so long.

“The business of most property developers is to develop the land belonging to the company. Landbanking as a core business is new to the authorities. Some plantation companies eventually turn into landbanking companies. But their core business when they listed was as a plantation outfit,” says an investment banker.

Lim has explored the idea of listing IWH since 2010, when Iskandar Malaysia was positioned to take advantage of the lack of land and high cost of doing business in Singapore. At the time, there were high expectations for Johor and Iskandar Malaysia to take off, to the extent that there were several Malaysian and Chinese buyers for the parcels of land under IWH.

However, since 2015, property market sentiment as a whole has weakened, particularly in Johor, due to the over-building of condominiums and serviced apartments. China’s developers are also facing financial problems and not expanding outside their country.

In 2017, Lim attempted to inject IWH into Ekovest and eventually amalgamate the assets of IWH and IWCity. However, Ekovest’s shareholders rejected the deal.

Perhaps Lim will have better luck in 2025. 

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