By Doreenn Leong
PARAGON Globe Bhd (PGB), which took over control of Goh Ban Huat Bhd (GBH) more than two years ago, stayed pretty much under the radar as it works towards establishing itself as a property and construction player.
One deal the company has been working on since taking over GBH was negotiating with Iskandar Capital Sdn Bhd, a company of Iskandar Investment Bhd (IIB), for the proposed acquisition of a 12.6ha freehold land in Iskandar Puteri for RM60.96 mil cash. Khazanah Nasional Bhd, the Employees Provident Fund and Kumpulan Prasarana Rakyat Johor are the shareholders of IIB.
“PGB has interest for the land in the ISL (Integrated Sustainable Living) township for almost two years, originally for bigger plots of land. In order to demonstrate our genuine interest, PGB placed a down payment of RM8.5 mil (13.94%). Upon the signing of a sale and purchase agreement, PGB paid another RM3.69 mil (6.06%) to Iskandar Capital,” its group managing director Datuk Seri Edwin Tan Pei Seng tells FocusM.
“We believe that with the fear and negativity surrounding the property market in Johor, there are more opportunities for local developers who are able to better feel the pulse of the property market here to add value to areas like the ISL township.
“Our group of companies has invested in assets and projects within Johor and we are also able to demonstrate that we are a long-term player in this part of Malaysia,” he adds.
Tan says the company will be building homes priced at around RM500,000 to RM600,000 for the middle-income group.
The purchase of that piece of land may not be a huge investment but Tan hopes this serves as the first step to hopefully secure more land deals with Iskandar Capital in the near future.
“We believe it is important for PGB to live up to the expectations that Khazanah-related companies have on us. PGB and companies like Iskandar Capital share a common long-term interest to see the success of the ISL township.
“We would definitely want to ride on the back of this milestone deal to embark on more joint projects that can enhance the vibrancy of the ISL township,” he adds.
Tan says the company wants to grow into an integrated property developer that focuses on Johor and the Greater Kuala Lumpur region.
PGB announced on Dec 5, 2019 that its wholly owned unit Paragon Globe Properties Sdn Bhd has entered into a conditional sale and purchase agreement with Iskandar Capital for the purchase of about 31.1 acres of freehold land in Pulai, Johor Bahru, for RM60.96 mil cash. The deal is expected to complete in the first quarter of 2021.
Currently, PGB only has the Pekan Nenas Industries Park project, which has seen good take-up rates.
“The take-up rate for phase 1 of Pekan Nenas was quite good, at 92%. In Johor, the requirement is to allocate 40% as Bumiputera lots. After one year, we can apply to release the Bumiputera lots. We are now selling phase 2 of the Pekan Nenas shophouses,” Tan says.
Healthcare business
Apart from property development, PGB is also making inroads into healthcare business, according to its CEO Gary Goh.
“We will also inject the healthcare business currently parked under the Tan family’s private vehicle Joland Group into the listed company.
“There is already a roadmap for our healthcare thrust. Joland has the first healthcare business Selgate Sepang Hospital. We are talking to a party to set up an ambulatory care centre, which gives us a quicker footprint in the healthcare business, and at the same time, we can learn the business,” says Goh, who was appointed on Nov 1, 2019.
On Dec 20, 2019, PGB announced that it is acquiring a 99.06% stake in Builtech Acres Sdn Bhd for RM52.9 mil cash. This deal will require shareholders’ approval as it is a related party transaction, given that Builtech Acres is currently 100% owned by Tan.
Builtech Acres is the holding company for Sepang Medicity Sdn Bhd and holds two parcels of adjacent vacant freehold land zoned for commercial use in Labu, Sepang, Selangor, which measures about 10.04ha in total.
The first tract of land, measuring approximately 2.86ha, has been granted approval by the Ministry of Health to establish and maintain a private hospital.
Builtech Acres had earlier entered into an agreement with Selgate Healthcare Sdn Bhd and Sepang Medicity on Nov 7, 2019 to build and operate a 121-bed private hospital for 15 years. The gross project revenue for 15 years is RM199.65 mil.
The second tract of land is located right next to the first tract of land, measuring some 7.18ha. Selgate Healthcare is the healthcare arm of Selgate Corporation Sdn Bhd and a company of Perbadanan Kemajuan Negeri Selangor (PKNS).
According to Tan, it will cost RM80 mil to RM100 mil to build the hospital, which will then be leased out to Selgate for 15 years with an average of 10% returns. He expects a payback period of about eight years for the project, factoring in the interest cost.
Related party transactions
Generally, related party transactions are something that minority shareholders are mindful of. In this case, Tan’s private companies have been injecting assets into the listed vehicle. They would be wondering if the price is fair and whether the owners sell their not-so-attractive assets into the listed company.
Tan believes he is doing what is best for PGB as well, and the assets are ripe for growth.
“Joland is also into property development. It was started by my father and he loved to buy land to keep for many years. For our Semarak KL land (7 acres), we kept it for 16 years and Sepang land for 30 years. We bought it when the airport was about to start. Now, our generation, we are looking at developing the land.
“Since we got this listed company, our land which is ready for development, we will let PGB do it. This means PGB will buy the land and develop it within a year or so,” Tan explains.
He adds that for the Pekan Sentral project, PGB bought the entire piece of land which already has other shoplots.
“We will develop new shoplots and at the same time enjoy the spillover effects from the existing ones,” he says.
He also points out that in the recent deal with Iskandar Capital, PGB is the party buying directly instead of using Joland and then flipping the land to PGB.
“We will still tap the pocket of opportunity in Johor as the infrastructure is coming up; areas are more connected, and some of the land owned by Joland can be ready. Once ready, PGB can take it up for development.”
Meanwhile, Tan says Joland will continue to operate its education, hotel and retail businesses. – Feb 11, 2020
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Buyers wanted for PGB’s ceramic business
Paragon Globe Bhd (PGB) was formerly Goh Ban Huat Bhd (GBH), a company controlled by tycoon Tan Sri Robert Tan Hua Choon, who is better known as the Casio King. Robert Tan, who sold the 51% stake in GBH to Paragon Adventure Sdn Bhd in September 2017 for RM145.7 mil, still has a 9.7% stake in PGB.
Paragon Adventure, which is owned by Datuk Seri Edwin Tan (65%) and his brother Datuk Seri Godwin Tan (35%), is part of the Joland Group, a private entity of the Tan family.
About two months after the entry of the Tan family, PGB entered into a related party transaction involving the purchase of industrial land and commercial properties in the Pekan Nenas Industrial Park in Pontian, Johor from the Tan family for a total of RM143 mil.
Under the new owners, the company is looking at disposing the ceramic business as it focuses on construction and property development businesses. PGB is now reclassified under the property sector effective from Jan 13, 2020 from industrial products and services.
“We are exploring plans to sell our ceramic tile business and focus on property. We are close to reaching a definitive agreement for the sale, at a very advanced stage now,” says its group managing director Edwin Tan.
Among other businesses, PGB sold its 20.25% stake in Time Galerie (M) Sdn Bhd to Marco Holdings Bhd for RM13.3 mil. Concurrently, Marco Holdings, which is controlled by Robert Tan, acquired a 20.14% stake in Time Galerie from Mohtar Abdullah.
Joland Group, established in 1970 by Edwin Tan’s father Datuk Tan Eng Boon, who resigned as PGB chairman on Dec 28, 2018. It is involved in property development and has diversified into education, retail and healthcare businesses.
Johor-based Joland developed the Grand Paragon Hotel, Kukup Golf Resort, Paragon Residences @ Straits View, Paragon Suites @ CIQ and Bizhub Skudai 8. It also owns the Paragon Private and International schools in Johor.
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