Friday, June 8, 2012

SP Setia/Sime acquire London's Battersea Power Station for RM2b

Business Times: Fri, Jun 08
TWO Malaysian property conglomerates have beaten a host of rivals to acquire the famous Battersea Power Station in London for RM2 billion (S$808 million).

SP Setia and Sime Property, the property unit of the Sime Darby conglomerate, told the stock exchange yesterday that they had signed an exclusivity agreement with the station's joint administrators and receivers Alan Bloom and Alan Hudson of Ernst & Young LLP.

They beat contenders such as Malaysia's Pilgrims' Fund Management Board (Luth in Malay) and Chelsea Football Club owner Roman Abramovich to secure it.

"SP Setia and Sime Darby Property have today entered into an exclusivity agreement with the joint administrators and receivers, on behalf of the owners of the property, to acquire the site for £400 million or approximately RM2 billion," the companies said in a joint statement.

"SP Setia and Sime Darby Property have a period of up to 28 days to conduct further due diligence and investigations as may be deemed necessary and to negotiate the contract for the acquisition of the property on terms and conditions acceptable to the parties," the statement added.

SP Setia and Sime Darby Property were advised by RREEF. The acronym is a reference to Deutsche Bank's real estate arm.

The deal reflects the growing global reach of Malaysian companies after national oil firm Petronas first blazed the trail in the early 1990s. This year alone has seen a number of property deals whereby both the Employees Provident Fund (EPF), the country's largest private pension plan, and state-owned Permodalan Nasional have snapped up RM10 billion worth of property in London because of the relative cheapness of the pound against the ringgit.

Indeed, it was previously reported that SP Setia had approached the EPF to revive its takeover bid after its redevelopment plans for the power plant were rejected last year.

Property researchers CoStar had said in its report that state pension fund EPF was expected to join forces with SP Setia, Malaysia's largest listed property developer by revenue, and RREEF to convert the power plant into a mixed development worth close to RM7 billion. But the EPF denied that they had bid for the 39-acre site just south of London's financial district.

Bloomberg and the Financial Times had also previously reported that EPF had beat out top-flight football club Chelsea FC for the highly sought after asset in the British capital.

According to the paper, Mr Abramovich had tabled a bid that would have led to the power station being turned into a 60,000-seat stadium for his football club. Meanwhile, Luth had also signalled its intentions: in April, it said that RM1 billion had been set aside for the power station.

The 80-year-old power station was mothballed in 1983 and has featured heavily in English pop culture, appearing on album artwork for bands such as The Beatles and Pink Floyd.

In their statement to Malaysia's bourse, SP Setia and Sime Darby Property said they planned to develop the coveted property into a "sustainable multi-use real estate regeneration project that will provide economic impetus for the creation of a new vibrant centre for south-west central London".

They added that they will preserve the facade of the historical power plant with its iconic chimney stacks.

The companies said they have also committed to building a new underground station as part of the proposed extension of the Northern Line (part of the London Underground's Tube network) which is to pass by the power plant's site...
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