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Saturday, March 10, 2012

SP Setia said to be keen on fresh bid for London’s Battersea site

PETALING JAYA: SP Setia Bhd, which made two bids of £262mil (RM1.2bil) and £324mil (RM1.5bil) last year for London's Battersea Power Station site, is said to be keen to make a fresh bid for the ongoing sales tender exercise for the 15.8ha (39.1 acres) freehold site.

According to an advertisement in The Wall Street Journal on Wednesday by joint agents Knight Frank and Ernst & Young, the freehold of the site is offered for sale by private treaty via informal tender.

It said the site is located in a prominent central London riverside location with valid outline planning permission for a major mixed use development totalling about 750,000 sq m (or 8 million sq ft) in gross external area (GEA).

However, when contacted yesterday, SP Setia declined to comment on the tender exercise.

Knight Frank Malaysia executive director Sarkunan Subramaniam said a number of Malaysian developers had the technical and financial capabilities to undertake the redevelopment of the Battersea Power Station site into a mixed used development.

“It is a sizeable commitment, no doubt, and we expect a number of good bids for this tender exercise,” he told StarBizWeek.

Sarkunan said a series of advertisements which started appearing last Saturday, had appeared in a number of countries including Malaysia, Hong Kong, China and the Middle East.

He pointed out that the submission of bids should be no later than 12 noon, London time, on May 6.

On Nov 18 last year, SP Setia submitted its first offer of £262mil to Lloyds Banking Group and Ireland's National Asset Management Agency to buy debts linked to the power station.

However, the offer was rejected. It subsequently submitted its second bid of £324mil to take control of the site and to buy up the bank debt but the bid was also rejected.

In an announcement to Bursa Malaysia on Nov 24 last year, SP Setia confirmed the rejection by the lenders but added that it believed property development prospects in London were positive.

“Accordingly, the group will continue to look out for and assess other possibilities to invest, via strategic partnerships and land-banking opportunities, in this exciting market,” it added.

SP Setia president and CEO Tan Sri Liew Kee Sin had said that the company was keen on venturing into London's property market.

A Hwang DBS Vickers research note yesterday said backing from Permodalan Nasional Bhd (PNB), the largest shareholder of SP Setia, could enhance the company's bids for government land and large overseas projects.

“SP Setia, with its RM83mil net cash and RM2.8bil record unbilled sales, has room to landbank further.

“It is eyeing government land redevelopment projects, as well as PNB's prime landbank in the Klang Valley and Johor.

“It may also consider expanding in Vietnam (downtown Ho Chi Minh City and Hanoi for long-term potential), Australia (Melbourne, Sydney), and London (still pursuing Battlesea with government-linked companies as potential partners), with a minimum target of 20% in pre-tax profit margins,” the report added. Meanwhile, a Reuters report on Feb 15 stated that the price tag for the site was about £300mil to £400mil.

It added that the decaying coal-fired power station that was closed in 1983 after 50 years in service was expected to draw interest from the Far East, Russia and the Middle East.

The site has seen several failed redevelopment attempts in the three decades since the power station was closed.

Irish developer Real Estate Opportunities (REO) was the last to try its luck with a £5.5bil redevelopment plan but the plan collapsed in December last year after the company went into administration.

AFP reported last month that even top English Premier League football club Chelsea had expressed an interest in acquiring the site.

By The Star

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