- POSTED: 02 Jan 2014 23:44
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Singapore-listed firm GSH Corporation has bought a 77.5 per cent stake in a resort group in Malaysia for 700 million ringgit (S$270 million).
SINGAPORE: Singapore-listed firm GSH Corporation has bought a major stake in a resort group in Malaysia for 700 million ringgit (S$270 million).
GSH, formerly an electronics company known as JEL Corporation, has been focusing on property development since Singaporean billionaire Sam Goi gained control of the company in 2012.
GSH shares jumped 7.4 per cent to close at 8.7 Singapore cents following the news.
Sam Goi made his fortune selling popiah, or spring roll skin.
But Singapore's popiah king has made another significant push into property development.
Through his publicly-listed firm GSH Corporation, Mr Goi will buy a 77.5 per cent stake in a resort in Kota Kinabalu in Sabah, Malaysia.
At the same time, in separate transactions, he will also acquire stakes in two parcels of ocean-front land that is adjacent to the resort.
The two sites have a combined area of 1.1 million square feet (25.2 acres), and will be developed into luxury residential apartments.
Mr Goi said: "After developing the 12-acre site, we will be able to launch and sell in the middle of next year. The revenue will give the company fresh funds to embark on bigger projects. And if sales are brisk, we will be able to start work on the 13-acre site."
The resort, known as Sutera Harbour Resort, has been facing a distressed debt issue for years.
This was when the developer was hit by rising debt costs during the 1997 Asian Financial crisis.
The cash injection by GSH will go towards the settlement of all bank debts owed by the resort.
GSH said one of the reasons why it beats out other bidders from Hong Kong, Taiwan, China and Malaysia was that it was able to acquire the stake with cash.
GSH’s chief executive officer Gilbert Ee said: "A transaction of this size typically involves some external funding or some acquisition financing, and for GSH, we were able to do this deal without that. This allows us to move faster, make quicker decisions."
Mr Goi's foray into Sabah follows an earlier acquisition of a land parcel in Kuala Lumpur.
Analysts said there has been a rising trend of Singaporean investors developing properties in Malaysia, notably in Iskandar.
Terence Wong, head of research at DMG & Partners Research, said: "With investing in Malaysia, there are push and pull factors. The Singapore government, as we all know, has launched a series of cooling measures, and that has really pushed investors out of Singapore and to look abroad. In fact, Singapore investors are the largest investors in Malaysia and the likes of London."
Apart from property heavyweights like Capitaland, other Singapore-based developers that have announced projects in Malaysia over the past year include Link (THM) Holdings, Pacific Star Group, and Rowsley.