Gagasan Nadi Cergas To Acquire Student Hostel Asset Management For RM185 Mln

KUALA LUMPUR, Nov 5 (Bernama) -- Gagasan Nadi Cergas Bhd has proposed the strategic acquisition of a student hostel asset management concession valued at RM185 million.

Group managing director Datuk Wan Azman Wan Kamal said the strategic acquisition will strengthen the group’s concession and facility management operations which remain its key strength, delivering a steady and stable stream of recurring income.

Gagasan Nadi Cergas will undertake a corporate exercise to gain full control of Konsortium PAE Sepakat Sdn Bhd (KPSSB), which owns a facility management concession for student hostel facilities in seven polytechnic campuses, by acquiring the two shareholders in KPSSB, namely Serata Ehsan Sdn Bhd (SESB) and Seri Delima Anggun Sdn Bhd (SDASB).

bootstrap slideshow

In a statement today, the company said the acquisition of KPSSB will enlarge the group’s revenue and earnings base for the segment through sustainable income and cash flows generated from the concessions under KPSSB.

SESB, through its fully owned subsidiary, PAE Builders Sdn Bhd, holds 44.4 per cent equity interest in KPSSB, while the balance of 55.6 per cent interest is held by SDASB.

The proposed corporate exercise entails Gagasan Nadi Cergas signing two conditional sales and purchase agreements.

bootstrap slideshow

“We will acquire the entire equity interest in SESB for a cash consideration of RM80 million and the entire equity interest in SDASB for RM105 million cash,” it added.

Meanwhile, KPSSB entered into concession agreements with the government of Malaysia in 2013 to develop and maintain student hostels at campuses in Banting, Ipoh, Port Dickson, Johor Bahru, Seberang Prai, Jeli, and Kota Bahru until 2036.

Each polytechnic campus is served by a special-purpose vehicle company fully owned by KPSSB. Henry Butcher Malaysia (Mont Kiara) Sdn Bhd has been appointed by KPSSB as the third-party asset management service provider for the student hostels at the polytechnic campuses.

Meanwhile, Wan Azman further said that the strategic acquisition is value accretive for the group, considering the discount of the purchase price of 19.1 per cent relative to the book value.

Additionally, the profit after tax of RM14.1 million recorded by KPSSB in the financial year ended Dec 31, 2023, will generate an annual yield of about 7.0 per cent.

Gagasan Nadi Cergas's facility management and utilities segment is complemented by its construction and property development segments.

The group’s construction segment boasts a healthy order book of some RM478 million while the property development segment is developing 6,000 ‘Rumah Idaman’ affordable housing units in Bukit Jelutong and Kwasa Damansara, as well as over 1,000 Idaman Amani affordable housing units in the City of Elmina.

-- BERNAMA