SINGAPORE: Malaysian conglomerate DRB-Hicom is selling its entire stake in Singapore unit Corwin Holdings for $140 million after its first attempt to sell the shopping mall operator at a higher price failed earlier this year.
The latest sale price is nearly 40% lower than what it had expected from the aborted May deal. Still, DRB-Hicom could book an estimated 348 million ringgit ($84 million) gain from the disinvestment of its 90%-owned Corwin, the company said in an exchange filing. However, it didn’t disclose why it has agreed to sell Corwin at a lower price.
“We are positive on this latest corporate development by DRB-Hicom to divest its non-core assets,” said Kenanga Investment Bank’s analyst Raymond Choo. If the deal goes through, the house plans to raise its target price on DRB-Hicom’s share by 18% to 1.20 ringgit, he added.
Corwin owns an eight-floor shopping mall in Singapore called The Verge. Earlier, DRB-Hicom had announced it would sell Corwin to Evolutyon Real Estate Investment Holding for $225.4 million. However, the initiative collapsed after Evolutyon failed to “fulfil its contractual obligations,” DRB-Hicom had said.
The new buyer Columba Holdings is a joint venture between Singapore-listed construction firm Lum Chang Holding and fund manager LaSalle Investment Management Asia. Minority shareholders Mohamed Mustafa & Samsuddin Co. and B.I. Distributors that own the remaining combined 10% in Corwin, have also agreed to sell their stakes to Columba.
Proceeds from the sale will be used toward DRB-Hicom’s working capital within a year of closing the deal, the company said. It expects to complete the deal in the fourth quarter. “The proposed disposal will allow DRB-Hicom to unlock the value of its investment in Corwin based on the current market value of The Verge,” it added.
DRB-Hicom, which mainly assembles and sells vehicles ranging from Honda-branded motorcycles to luxury cars made by Mercedes Benz, has been seeking to shore up its finances as sales fell across the automotive industry in Malaysia on the back of slowing economic growth and higher cost of living.
