KUALA LUMPUR (Aug 14): Crop protection products manufacturer and distributor Hextar Global Bhd (KL:HEXTAR) is diversifying into property development with a RM3.8 billion gross development value (GDV) mixed-use project in Shah Alam, in partnership with a unit of the Selangor state development agency.
The project, Hextar Global's maiden property development, will be undertaken through a joint venture with Kotaputeri Development Sdn Bhd (KDSB), a wholly-owned subsidiary of Perbadanan Kemajuan Negeri Selangor (PKNS), according to a Bursa Malaysia filing on Friday.
The proposed development spans 240.39 acres of leasehold land in Siera Alam, Shah Alam, and is expected to be developed over 10 years. Its preliminary gross development cost is estimated at RM2.8 billion, including the RM270 million land purchase price.
Hextar Global said its indirect unit Hextar Landmark Sdn Bhd entered into a joint venture and shareholders' agreement with KDSB to undertake the development via a joint-venture company Hextar Siera Sdn Bhd.
Under the agreement, Hextar Landmark will hold a 70% equity stake in Hextar Siera, while KDSB will hold the remaining 30%. As Hextar Global effectively owns 70% of Hextar Landmark through its wholly-owned Halex Realty Sdn Bhd, the group's effective interest in Hextar Siera will be 49%.
The proposed development is expected to comprise terrace houses, semi-detached villas, villas and commercial components, alongside high-rise residential, commercial and lifestyle components.
To spearhead its new property division, Hextar Global has identified Datuk Edmund Kong Woon Jun as chief executive officer of Hextar Siera. Kong was previously chief executive officer of KHK Land Sdn Bhd and group managing director of both Tropicana Corp Bhd (KL:TROP) and GuocoLand (Malaysia) Bhd (KL:GUOCO).
“This marks a transformative milestone for Hextar as we embark on our maiden property development venture," Hextar Global group managing director Lee Chooi Keng said in a separate statement. "Our partnership with PKNS combines complementary strengths to deliver a thoughtfully planned masterplan that creates lasting value for homeowners, the surrounding community and our shareholders.”
Hextar Siera has also entered into a sale and purchase agreement with PKNS to acquire the 240.39-acre development land for RM270 million cash.
The acquisition will be funded through bank borrowings of up to 70% of the purchase price, with the remaining to be funded by the joint-venture partners through subscriptions for redeemable non-convertible cumulative preference shares.
Under the operational arrangement, Hextar Landmark will assist Hextar Siera with the design, construction, planning, financial requirements and authority approvals for the development, while KDSB will provide administrative and development management support. KDSB will also procure PKNS to provide access to roads and infrastructure surrounding the development land.
Hextar Global said the diversification into property development, construction, property investment and management would broaden its revenue and earnings base, while its existing specialty chemicals, agriculture and fruit businesses would remain its core operations.
As the group expects the new property segment may contribute 25% or more of its net profit and/or account for 25% or more of its net assets in the future, the proposals require Hextar Global shareholders' approval at an extraordinary general meeting.
The corporate exercise is targeted for completion by the fourth quarter of 2026, although the development itself is expected to take about 10 years.
The joint venture is not expected to contribute materially to Hextar Global's earnings for the financial year ending Dec 31, 2026, as the development remains at a preliminary stage.
Malacca Securities Sdn Bhd has been appointed principal adviser for the proposals.
Earlier on Friday, trading in Hextar Global’s shares was halted from 2.30pm to 5pm pending the announcement. Trading in the counter will resume at 9am next Monday (Aug 17).
It last traded at 79 sen, with a market capitalisation of RM3.11 billion. Year to date, the counter is down more than 12%.