Rich Capital to buy 2 construction firms for up to $43.98m in new shares

SINGAPORE - Rich Capital, formerly known as Infinio Group, on Tuesday (Jan 8) said it is planning to expand into the construction business with the proposed acquisition of two construction companies for up to $43.98 million.The company has entered into a conditional share purchase agreement with Wang Zhen Wen and Rich-Link Group to acquire Rich-Link Construction (RLC) and Rich-Link Builders (RLB).

RLC is a registered contractor with the Building Construction Authority of Singapore under General Building A1 and is licensed as a General Builder Class 1, while RLB is registered under General Building C3 and licensed as a General Builder Class 1. Both companies are effectively owned by Mr Wang, who is also the controlling shareholder and non-independent non-executive chairman of Rich Capital.

The two companies are valued within the range of $53.5 million to $62.9 million, based on an independent valuation conducted. The consideration is at a 17.8 per cent discount to the lower bound of the valuation range.

Rich Capital will pay the sellers via the issuance of new shares at $0.006 apiece over two tranches. The second tranche payment may be adjusted depending on the level of cumulative net profit before tax of the two companies for the calendar year 2019; it may also be paid by the company in cash subject to mutual agreement between all parties.

Rich Capital said the proposed acquisition will enable the group to increase its asset base, currently comprising largely of resources for property development and specialised construction services such as prefabricated and precast manufacturing, piling, civil engineering and infrastructure works, to include a new asset base of manpower and resources for main contractor dealings and correspondingly increase the scale of the group's business operations.

Upon the integration of the business operations of the two firms, Rich Capital will be able to leverage their construction expertise, particularly in the provision of construction services in the capacity of a main contractor, fitting-out services and general construction services and materials for ongoing and future property development projects within the group. The proposed acquisition is subject to the approval of the Singapore Exchange and the shareholders of Rich Capital at an extraordinary general meeting (EGM) to be convened. On the back of the share issue to Mr Wang and Rich-Link Group, both parties will collectively own up to 64.74 per cent of the enlarged share capital upon completion of the transaction.

Therefore, an approval on a whitewash resolution at the EGM will also be needed to waive the requirement for Mr Wang and Rich-Link Group to make a mandatory general offer for Rich Capital.