Kuala Lumpur-centric property developer Radium Development Bhd (Radium) is raising a total of RM434 million proceeds from its upcoming Initial Public Offering (IPO) on the Main Market of Bursa Malaysia Securities Berhad to reinforce its presence in the capital city.
Distinctive in that there is no offer-for-sale component in its IPO, all proceeds from Radium’s IPO are channeled to the Group. Radium’s IPO exercise involves a public issuance of 868.0 million new shares, representing 25.0% of its enlarged share capital at RM0.50 apiece.
Of the total RM434 million in proceeds, RM171 million is earmarked for acquisition of landbank and/or development expenditure, and RM109.3 million for hotel construction.
A further RM93.9 million is allocated for repayment of bank borrowings, RM39.8 million for working capital, and the balance RM20.0 million to defray listing expenses.
Speaking at the IPO prospectus launch today, Radium Chairman Tan Sri Mhd Amin Nordin bin Abd Aziz reiterated that Kuala Lumpur, as the capital city of Malaysia, has a strong reputation as a thriving hub and the pinnacle of Malaysia’s socio-economic development.
Radium Development Independent Non-Executive Chairman Tan Sri Mohd Amin Nordin Abd Aziz said, “The tremendous employment opportunities in Kuala Lumpur continues to draw an increasing number of city dwellers, with the population for KL and Selangor projected to climb to 10.53 million-strong by 2040, from 8.98 million in 2021. Plus, Kuala Lumpur’s high-capacity and widely-connected urban transportation networks of LRT, MRT, highways and expressways support the efficient movement of people and goods. All these factors are expected to push Malaysia’s urbanisation rate from 78% in 2021 to 85% in 2040. Echoing his enthusiasm, Radium Group Managing Director Datuk Gary Gan revealed that all of Radium’s projects, solely in Kuala Lumpur, enjoyed full take-up rates for launched units, even those launched at the height of the COVID-19 pandemic in 2020.”
To date, Radium has successfully delivered projects with a total gross development value (GDV) of RM2.1 billion. Radium holds 10% share of the high-rise residential properties market in Kuala Lumpur based on 2021 revenue, and 7% of the same market based on number of units.
Radium Development Group Managing Director Datuk Gary Gan Kah Siong said, “We are earmarking RM171.0 million from our IPO proceeds for land acquisition and project development in Kuala Lumpur. For a start, we have entered into a joint venture agreement to potentially launch a development in Mukim Batu in the first half of 2024, and shortlisted three parcels of land in Mukim Petaling to acquire and/or jointly develop.”
“These future landbanks underline our commitment as a Kuala Lumpur-centric property developer, focused on affordable housing. Besides, we will also develop our RM1.5 billion GDV new launches in 2023. In the third quarter of 2023, we will unveil our largest undertaking yet: Residensi Desa Timur in Salak South, Kuala Lumpur, with nearly RM1.0 billion GDV. This complements The Chancery in Jalan Ampang, the RM521.0 million commercial-residential project launched in February 2023.”
“With its prime location of being just 5km from KLCC and convenient access to the Middle Ring Road 2 and other highways, The Chancery will notably include five floors of hotel, which we are allocating RM109.3 million from our IPO proceeds to construct. When the hotel begins operations in 2026, this will form our recurring income stream, and reinforce Radium’s commitment to growing alongside thriving Kuala Lumpur; this time also appealing to tourists to the capital city.”
Malacca Securities Managing Director Lim Chia Wei reiterated the positive macroenvironment for Radium’s plans, given the 8.7% Malaysian economy growth in 2022 following post-COVID easing of restrictions and normalised economic activities.
Under Budget 2023, the government continued to exempt stamp duty for first-time homeowners, where full stamp duty exemptions will be granted for homes valued at RM500,000 and below until the end of 2025, and 75% stamp duty exemptions will be granted for homes valued at more than RM500,000 and up to RM1 million until 31 December 2023.
The improving economic sentiment is also anticipated to have a favourable impact on the Malaysian tourism sector. Malaysia has progressively opened its borders to medical tourists and international tourists since 2020. The uplifting of global travel restrictions, including the reopening of China’s international borders since January 2023, further supports the normalisation of global travel and tourism.
According to the 12th Malaysia Plan, international tourist arrivals in Malaysia are expected to reach 24.3 million in 2025, which is comparable to pre-COVID-19 levels of 25.8 million in 2018 and 26.1 million in 2019. The return of international tourists coupled with the quicker pace of domestic tourism would drive the long-term growth of the hotel industry.
Malacca Securities Managing Director Lim Chia Wei said, “I am pleased to highlight that Radium targets a distribution of no less than 30% out of its consolidated profits after taxation attributable to shareholders available in each financial year in the form of dividends to the shareholders annually, commencing from the financial year ended 31 December 2022. This, again, demonstrates its commitment to building good for all stakeholders, including shareholders.”
Malacca Securities is the principal adviser, managing underwriter and joint placement agent of the Radium IPO, whilst CIMB Investment Bank is the joint underwriter and joint placement agent.
Out of the 868 million new shares to be issued, 273 million shares will be made available to the Malaysian public via balloting; and 60 million shares to its eligible key senior management, employees of the group and business associates, including any other persons who contributed to the success of the group.
A further 435 million shares will be offered by way of private placement to selected bumiputera investors approved by the Ministry of Investment, Trade and Industry; and the remaining 100 million shares for selected investors by way of private placement.
Applications for Radium’s IPO will open today and close on Tuesday, 16 May 2023 at 5.00 p.m. Barring unforeseen circumstances, Radium is slated to list on the Main Market of Bursa Malaysia on 31 May 2023.
