Marble miner Terratech Group is going into the property development business.
The group has agreed to buy Malaysian builder Capital City Property for $300 million, in what is essentially a reverse takeover deal, it said in a statement to the Singapore Exchange yesterday.
Catalist-listed Terratech will pay for the acquisition by issuing 4.29 billion new shares to Capital City at seven cents apiece, which will result in Capital City taking up an 81 per cent stake in Terratech.
Capital City Property is owned by award-winning architect and executive director Siow Chien Fu, who holds a 50 per cent stake, and Mr Colin Tan June Teng and Mr Edwin Tan Ping Huang - the brothers behind Malaysian-based developer Hatten Group. They each hold a 25 per cent stake.
Capital City Property will complete its first development in 2018.
The project, which is in Tampoi, Johor Baru, is called Capital City and comprises two hotel and service suite towers and three towers of serviced apartments atop a mega mall.
The developer will also seek out new partnerships to develop projects in Malaysia, Mr Siow told a briefing at the Shangri-La Hotel yesterday.
Mr Siow noted that Capital City Property's business model is "untraditional" and different from typical developers that have huge landbanks incurring high holding costs.
Capital City has no land banks but will identify partners it can work with to design and build "exciting and commercially viable" projects.
"If someone, like a developer, has a landbank and does not know what to do to transform it, then we are a good target for them to approach," Mr Siow said.
Terratech chief executive Loh Chang Kaan said: "With a larger market capitalisation and growth potential, we aim to attract stronger analyst coverage and raise investor interest in our company."
Mr Siow said he was not deterred from listing here despite the caution surrounding the Iskandar property market. He added: "Iskandar is a big area, and the prospects of Iskandar will be very good."
Terratech shares last traded at 5.1 cents on Tuesday before the trading halt was called.
The reverse takeover deal will have to be approved by shareholders at an extraordinary general meeting to be convened at a later date.