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Monday, November 12, 2007

Raising the profile of Putrajaya Perdana

Now that Swan Symphony Sdn Bhd has become the major shareholder of Putrajaya Perdana Bhd, the market is asking what is the next course of direction for this niche construction outfit

It has continued to make news over the last two months with announcements of grand plans locally and in the Middle East.

While the management of the company has been open about the direction in which Putrajaya Perdana is headed and what it would be doing since August, they have now decided to keep mum on future plans.

The Finance Ministry building in Putrajaya
When contacted in the earlier part of the week, a company official commented that much had been said over the past months and management has now decided to lie low, for the moment.

Putrajaya Perdana, which specialises in master plan development and energy-efficient construction, has definitely sparked some retail interest.

In a filing to Bursa Malaysia on Oct 31, it was reported that the takeover of Putrajaya Perdana, by Swan Symphony, a 51%-owned subsidiary of Abu Dhabi Kuwait Malaysia Investment Corp (ADKM), has been completed.

ADKM, through Swan Symphony purchased a 50.6% stake in the company from Eastern & Oriental Bhd for RM199mil or RM2.90 per share.

Swan Symphony is led by Yousif Mana S. Al Otaiba and associates who has substantial stakes in ADKM.

The exercise would trigger a mandatory general offer for the remaining shares not owned by Swan Symphony, but management had said it aimed to keep Putrajaya Perdana listed.

Most analysts said Swan Symphony's acquisition of a majority stake in Putrajaya Perdana could signify interest by the former to transform the company into a global construction player.

An analyst with a local broking house said: “We believe there could be a change in direction or pace of development for Putrajaya Perdana in the near future.”

He said mergers and acquisitions (M&As) were common these days as many companies in various industries wanted to expand their businesses and grow in the fastest possible time.

“Ideally it should also involve growing at the lowest cost to gain bigger market share and higher profitability, via economies of scale,” he said.

The brickwork facing of buildings in Parcel D, Putrajaya

He added that such M&As would hold true for the construction industry as well.

It was possibly easier for a company or a group of investors to buy over an existing company, preferably one that was not too large with a clean balance sheet and good assets and use it as a vehicle to fast track its growth in the industry.

On why Putrajaya Perdana was chosen, a construction analyst said Swan Symphony could possibly be attracted to Putrajaya Perdana due to the company's mid-size cap (for a construction company) and unique business model which emphasised on the environment, especially energy-efficient buildings. Another factor was that the purchase price was attractive.

The low-energy office of the Energy, Water and Telecommunications Ministry

So far most of Putrajaya Perdana's projects are local and mainly in Putrajaya.

However, one of the company's largest and latest projects was the construction of the Pavilion KL (RM400mil) located in the heart of the city, Marc serviced residences (RM100mil) and the construction of government quarters in Putrajaya (RM300mil).

Currently, Putrajaya Perdana is also bidding for a few projects under the Ninth Malaysia Plan and it is hopeful of securing some projects in the Middle East soon.

On whether M&As was the right way for the company to grow, the analyst said M&As were probably the fastest way to build a business today.

“In the case of Putrajaya Perdana it was acquired. It would depend on how effective the new majority stakeholder manages the company and its acquisitions going forward.

“More importantly, will be how Swan Symphony is able to justify the acquisitions, locally and abroad based on return on investment,” said the analyst.

He said the interesting part in this deal was that it involved a new and foreign partner/investor with a strong network, especially in the Middle East and the financial strength to raise the profile of Putrajaya Perdana among the big boys in the construction sector.

“We suspect there will be more acquisitions by Swan Symphony in the not so distant future,” he said.

In fact, the same group of investors have made an offer to acquire a 45.6% stake in Loh & Loh Corp Bhd, which specialises in water infrastructure construction.

The analyst said Putrajaya Perdana stakeholders including retail investors should be happy that a foreign partner with “clout” was willing to support the company.

“The new partners with the controlling stake in Putrajaya Perdana has informed shareholders that there would not be any change in management,” he noted.

By The Star (Stories by Danny Yap and Fintan Ng)

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