Hong Leong Asia, which has interests in building materials, plans to invest $68.1 million to bring its total interest in BRC Asia to 20%.
HLA’s concrete and BRC’s steel will have synergy in so-called Prefabricated Prefinished Volumetric Construction (PPVC) building technology.
“There will also be opportunities for growth overseas as China and other Southeast Asian countries work towards improved productivity in the building and construction sector,” notes HLA.
The acquisition will be in two parts. First, HLA will subscribe for 31.015 million new BRC Asia placement shares at $1.48 each, for a total of $45.9 million.
In addition, HLA will pay five existing BRC shareholders $22.2 million for their 15 million shares, also at $1.48 each. They are Xinsteel Singapore, Nuocheng International Trading & Investment, Toe Teow Heng, Wu Ai Ping and Shi Yong.
The vendor and placement shares will give HLA a stake of 16.77% of the enlarged share capital of BRC.
Prior to this, HLA already owns 3.6% of BRC’s shares.
The placement price of $1.48 represents a 2.06% discount off BRC’s Aug 27 volume weighted price of $1.511.
"As Asia undergoes rapid urbanisation, enhanced productivity in the building and construction sector will be in demand. Hong Leong Asia, together with BRC Asia will have a unique opportunity to develop and scale up innovative and sustainable urban solutions for cities of the future," says executive chairman Kwek Leng Peck.
"This is a unique opportunity to acquire a meaningful stake in BRC, a company steeped in history with a strong focus on innovation and its people,” says HLA CEO Stephen Ho Kiam Kong.
“There is potential to generate synergy between our concrete and steel reinforcement capabilities as we pursue the path towards technology and automation in Singapore and markets beyond,” he adds.
Darrell Lim, BRC Asia’s executive director, looks forward to having HLA on board as a substantial shareholder. “In due course, we hope to work closely with HLA to explore international growth opportunities, especially in sustainable and innovative building solutions."
BRC Asia’s CEO Seah Kiin Peng notes that HLA is a household name in Singapore, particularly in the industrials space, with leading brands in ready-mix and precast for the construction sector.
“We strongly believe that HLA's support will enhance the growth of our group, particularly in our quest to expand internationally."
For the nine months ended June 30 2021, BRC Asia’s earnings was up 46% y-o-y. It has an outstanding orderbook of $1.1 billion as of June 30 2021.
