KUALA LUMPUR (May 11): Tanco Holdings Bhd (KL:TANCO) is venturing into the concrete products manufacturing business via a joint venture with Hong Kong-based King Well Holdings Ltd (KWHL). The move is aimed at strengthening its construction materials supply chain and support future development projects.
In a Bursa Malaysia filing on Monday, Tanco said its indirect wholly-owned subsidiary Tanco Precast Industries Sdn Bhd (TPISB) had entered into a joint venture cum shareholders agreement with KWHL to fabricate, manufacture, supply and sell concrete-related products in Malaysia.
Under the agreement, the parties will incorporate a joint-venture company (JVCo), with TPISB holding a 51% stake and KWHL owning the remaining 49%.
KWHL is a Hong Kong-incorporated holding company whose shareholders and board members have experience in the manufacture, supply and sale of concrete-related products in China.
The JVCo’s board will have five directors, including three appointed by TPISB and two by KWHL, while the chief executive officer or managing director will be appointed from TPISB’s nominated directors. KWHL will also appoint the JVCo’s general manager, who will oversee the business' day-to-day operations and management.
The JVCo plans to establish its initial factory or plant on land owned by Tanco and its subsidiaries, with KWHL taking primary responsibility for factory setup as well as fabrication and manufacturing operations.
Tanco said the proposed joint venture would provide the group with a platform to build its own supply chain of concrete-related products to support its construction and building materials businesses, while also tapping demand in the Malaysian market. The venture is also expected to complement the group’s upcoming development projects.
The agreement is conditional upon the parties agreeing on the project’s feasibility and estimated gross development costs within four months, as well as obtaining the necessary approvals, permits and licences from Malaysian authorities.
Tanco shares gained one sen or 0.6% to close at RM1.67 on Monday, valuing the group at RM10.24 billion. The counter has rallied over 78.6% over the past one year.