This article first appeared in The Edge Malaysia Weekly on February 16, 2026 - February 22, 2026

THE new major shareholders of Main Market-listed construction services outfit GDB Holdings Bhd (KL:GDB) are circulating a share investment scheme promising investors a 20% annual return, payable entirely in shares, according to people familiar with the matter and a term sheet seen by The Edge.

The proposal, which requires a minimum investment of RM10 million, guarantees both principal and returns through share transfers rather than cash payments, the term sheet shows.

Under the scheme, investors would acquire GDB shares at the five-day volume-weighted average price (VWAP) on the transaction date. The principal would be secured through an equivalent allocation of shares.

In addition, investors would receive a 20% return, equivalent to RM2 million on a RM10 million investment, paid in two semi-annual tranches of RM1 million each, calculated based on the five-day VWAP at the time of distribution.

The document does not state whether the shares would be newly issued or sourced from existing shareholders.

If newly issued, the scheme would raise fresh capital for the company. If transferred from existing shareholders, proceeds would go to the vendor rather than to GDB.

All distributions would be settled via direct business transactions (DBT), meaning investors would not receive cash under normal circumstances. The term sheet states that any shortfall at maturity would be covered by additional shares or funds within a month.

It is worth noting that the vendor has the option to buy back the investors’ GDB shares via DBT at the end of the 12-month tenure under the same beneficial ownership.

Investors wishing to sell their shares before maturity would face a right of first refusal by the vendor to repurchase on the same terms.

The term sheet is explicitly non-binding, with final legal agreements expected only after mutual acceptance.

The scheme has raised eyebrows in the market, prompting questions about its risk and sustainability.

Market watchers say the structure is unusual given the fully share-based settlement and the 20% guaranteed return, which they describe as high relative to typical equity market expectations.

The scheme also relies on the vendor’s ability to buy back the shares or issue additional shares in the event of a shortfall, putting unreserved confidence in the new shareholders’ financial position and intentions.

“The actual value depends entirely on where the share price is at exit. If the buyback does not materialise and the share price has fallen, investors could face losses,” says a market observer.

In the term sheet, GDB says the scheme’s primary purpose is to enable “an investor to provide funding for the acquisition of shares in GDB, with guaranteed principal and guaranteed returns settled via share transfers”.

GDB completed a private placement in October 2025, issuing 93.75 million new shares, representing about 10% of its issued share capital, to independent third-party investors Datuk Seri Chan Leng Sam and Datuk Seri Voon Thien Loong.

Chan and Voon are the co-founders of 38 Yayasan Amal Cinta, a charity organisation based in Kuching, Sarawak.

The shares were issued at 41.9 sen apiece, raising about RM39.28 million to fund the group’s working capital. Following the placement, GDB’s share capital increased to 1.03 billion shares from 937.5 million.

Incorporated in 2013, GDB is principally involved in construction services, focusing on high-rise residential, commercial and mixed-use development projects as main contractor and principal works contractor.

Under the leadership of group adviser and founder Cheah Ham Cheia and executive director Alexander Lo Tzone Leong, GDB gained prominence and a strong reputation in the industry after completing projects such as KL Eco City, Etiqa Office Tower, Menara Hap Seng 3 as well as several developments in Desa ParkCity.

It is widely understood in the market that Cheah, 70, is seeking to divest himself of his majority stake in GDB as part of his retirement plan. Following a series of share divestments, he remains GDB’s largest shareholder with a 17.64% stake held through CHC Holdings Sdn Bhd, down from 48.94% as at March 24, 2025.

In December last year, Cheah transitioned from group managing director to group adviser after having served in the position for more than 12 years.

Meanwhile, 54-year-old Lo, another original promoter of GDB, also almost halved his stake from 21% to 11.34%.

Amid the ongoing gradual exit of Cheah and Lo, GDB saw the emergence of Andy Lai Wee Young as its new substantial shareholder with a 13% stake in mid-December last year. He then raised his stake to 13.12% in January this year.

Lai has been involved in a legal dispute at Jentayu Sustainables Bhd (KL:JSB) since December last year. Interestingly, he is also one of the largest Warrant B holders of Bina Puri Holdings Bhd (KL:BPURI).

Bina Puri is helmed by group managing director and group CEO Kevin Chai Chan Tong, who controls property development companies Oaks Group and Oaksworth Development, which are active in Kuching, Kota Samarahan and Matang in Sarawak.

Last Friday (Feb 13), GDB announced that it is acquiring three parcels of leasehold land in Kuching for RM32.72 million from companies linked to Chai.

The acquisitions, which do not require shareholder approval, are slated for completion within nine months.

In early February, GDB saw the resignation of non-executive chairman Datuk Seri Chia Lui Meng, who was then replaced by Clement Wong Teck Hoo. Wong had joined GDB as independent director in November last year. He is the founder and managing partner of Messrs Clement & Co in Kuching.

It has not gone unnoticed that the latest developments at GDB point to a growing Sarawak connection within the company, following the emergence of new shareholders and the appointment of a director who hails from the Borneo state.

The market believes the term sheet’s unnamed vendor is linked to the new Sarawakian shareholders.

Sources tell The Edge that several locally licensed firms were approached to participate in the scheme but most of them declined, suggesting instead caution among professional investors.

“They (the vendors), through some bankers and middlemen, have been looking for investors. They are planning to place out GDB shares to some funds in town for ‘warehousing’ purposes,” says a source.

While GDB has a track record in delivering high-profile projects, the new scheme represents a sharp departure from conventional equity-raising practices. Therefore, say corporate observers, investors should be aware of the risks.

“If the vendors fail to honour the payment, investors would have to sell the shares on the open market to recover their funds. If the share price has fallen below their entry cost by then, they would incur losses,” says a market observer.

To many investors, GDB is better known as the former main contractor for the 8 Conlay luxury development in Kuala Lumpur, developed by KSK Land Sdn Bhd. The now half-completed RM5.4 billion mega development has been facing years of legal disputes and financial deadlock, ultimately pushing it into receivership.

GDB was appointed main contractor for the iconic three-tower luxury development in November 2020, securing a RM1.25 billion contract — the largest in the company’s history. The project initially progressed smoothly and, in November 2021, KSK Land celebrated the structural completion of Tower A, the first of the YOO8-branded residences.

The situation changed dramatically in August 2022, when GDB suspended work on the project because of payment issues. The construction company sued KSK Land for RM120.7 million, claiming a breach of obligations under a corporate guarantee.

In January 2023, GDB lifted the suspension and resumed work on Tower A’s façade after receiving a partial payment. The company withdrew its lawsuit in March 2023 and recommenced construction on Tower A following another partial payment, although work on other sections remained suspended.

KSK Land failed to pay the outstanding balance in April 2023 and subsequent negotiations failed to produce a settlement.

In late April 2023, both GDB and KSK Land served notices to terminate the contract. KSK Land officially ended GDB’s RM1.25 billion contract as the main contractor for the development.

A month later, GDB filed a fresh lawsuit against KSK Land to recover RM102.1 million for services rendered and initiated adjudication proceedings under the Construction Industry Payment and Adjudication Act 2012.

In July 2023, an adjudicator ordered KSK Land to pay GDB RM97.8 million.

Then in January 2024, GDB filed a winding-up petition against KSK Land after the court set aside the latter’s restraining order against its creditors. This petition followed a court order that had previously allowed KSK Land to summon a meeting with creditors as part of a proposed scheme of arrangement.

In February 2025, an adjudicator ruled that KSK Land must pay GDB RM82.67 million over unfulfilled payment obligations. In November 2025, GDB secured a court order enforcing the adjudication award.

Separately, in April 2025, GDB also secured a court order to enforce an adjudication award of RM59.32 million against KSK Land, just over half of the original RM102.1 million claim.

Fast forward to mid-February this year and GDB said the High Court had awarded the company RM102.1 million, together with interest of 5% per year on RM93.39 million until full settlement and RM80,000 in costs, to recover amounts owed for work on the 8 Conlay project.

GDB’s share price has risen about 7% so far this year and closed at 38.5 sen last Thursday, giving the company a market capitalisation of RM397.03 million.

AskEdge data shows that GDB trades at about six times historical earnings, below larger Malaysian peers such as Gamuda Bhd (KL:GAMUDA), IJM Corp Bhd (KL:IJM) and Sunway Construction Group Bhd (KL:SUNCON), which are trading at between 23 and 26 times. 

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