Ekovest - DUKE

Sources say MRCB is mulling the divestment of its 30% stake in the DUKE.

It is understood that MRCB is seeking a valuation of between rm180 million and rm200 million for its 30% stake in DUKE, which has started to generate a healthy cash flow and has met its internal rate of returns.

It is already in talks with several parties although Ekovest which controls the remaining stake in DUKE has the first right of refusal. Such as move by Ekovest to acquire the remaining 30% stake in Nuzen Corp Sdn Bhd will see the company receive full revenue contribution from DUKE.

Furthermore, Ekovest is raising funds through the issue of bonds to construct the Sri Damansara and Tun Razak links, or DUKE 2, which will cost about rm1.2 billion.

Taking another step, Ekovest has submitted a proposal to develop park and ride facilities around the city centre.

Apart from recurring income, the construction of DUKE 2 will benefit Ekovest in terms of construction revenue. DUKE 2 will also improve connectivity to Ekovest’s landbank in the Gombak area where the company plans multibillion ringgit development projects.

Currently (Sept 2013), DUKE concession is a key source of recurring income for Ekovest.

Meanwhile the company has diversified into property development.

Apart from its projects in the Klang Valley, it owns 25ha of undeveloped land in Danga Bay.

Ekovest is likely beneficiary of the projects under IWH, which controls a large landbank in JB.

Ekovest is controlled by Tan Sri Lim Kang Hoo (32.38%) and Datuk Haris Onn Hussein, who is also the brother of Defense Minister Daturk Seri Hishammuddin Hussein (20.81%).

Kang Hoo is also a shareholder of IWH – in which he controls a 70% stake via Credence Res Sdn Bhd.

Ekovest and MRCB are also partners in the River of Life project via Ekovest-MRCB JV Sdn Bhd, a 60:40 JV between the two parties. The JV company was appointed the project delivery partner of the rm2.2 billion Klang river rehabilitation and beautification project.

With the disposal of DUKE, it raises a question if MRCB’s stake, in the ROL, project will be also put on the selling block.

Ekovest new ventures will accord the company assets for recurring income when the construction sector starts to taper down.