APSIL plans move into real estate agency business

21 July 2015, iProperty.com.Singapore

• Latest proposed acquisition of a Singapore real estate brokerage will give the Group a solid base of about 800 agents

• Earlier proposed acquisition of a real estate agency sub-franchisor, development of an online property portal, and rights-cum-warrants issue will also be voted on at an EGM 

• Move is in line with APSIL’s ongoing efforts to diversify from its current integrated bereavement care services, which will be divested

Asia-Pacific Strategic Investments Limited (“APSIL” or the “Group”), a provider of integrated bereavement care services in Asia, is seeking shareholder approval to back its plan to move decisively into the real estate agency business. 

The Group’s latest proposed acquisition of a Singapore real estate brokerage for S$2.75 million is another step in a series of earlier announced moves in the same direction. These are the proposed acquisition of a real estate agency sub-franchisor and the proposed development of an online property portal. Announced today, APSIL will be acquiring Global Alliance Property Pte. Ltd. (“GAP”), which was recently formed from the merger of two well-established local players, Global Property Strategic Alliance Pte. Ltd. (“GPSA”) and MORE Property Pte. Ltd. (“MORE”), both of which have a combined base of about 800 real estate agents. GAP will be taking over, amongst other items, the agents, fixed assets and rental leases of GPSA and MORE; all liabilities and debts will be excluded. GPSA and MORE will also be transferring certain members of their staff to GAP. Dato’ Dr Choo Yeow Ming, APSIL’s Chief Executive Officer, said: “This proposed acquisition will help to kick-start the new core business that we are looking to build, as we prepare to divest our current loss-making bereavement care services. “We remain committed to revitalising APSIL and enhancing shareholder value, and bringing the Group back onto a sustained path of profitability and growth.”

When approved, the consideration of S$2.75 million will be payable in two tranches. The first tranche, comprising S$1.25 million, will be paid in cash. The second tranche, worth S$1.5 million, will be paid in APSIL shares (“Consideration Shares”) within two months after the completion of the acquisition of GAP. The Consideration Shares will be deposited in escrow for twelve months and eighteen months before release to GPSA and MORE respectively. These shares will have an issue price pegged at 90% of the average APSIL share price for the five-day period preceding the date on which the conditions precedent for the acquisition are fulfilled or waived.

In addition to this, APSIL made two earlier announcements that will form the cornerstone of its new real estate agency core business. The first is a proposal to acquire 100% of Century 21 Hong Kong Limited (“C21-HK”), which is the sub-franchisor that grants the world-renowned Century 21 franchise to licensed real estate brokers in Hong Kong and Macau. When completed, this acquisition will also give APSIL access to Century 21’s marketing and operating systems as well as its retail networks. The next is a cooperation agreement with China Real Estate Development Union Group Limited (“CREU”) and Oei Hong Leong Foundation (“OHLF”) to jointly develop an online property transaction platform for overseas Chinese investors and enterprises. CREU, a pioneer in PRC real estate development, will provide the joint venture company with access to its extensive database covering the PRC real estate industry, policies and market trends for the purpose of developing the database. This proposed internet portal will serve overseas Chinese keen to invest in residential and commercial property both in China and across the globe. Dato’ Dr Choo commented: “Together with our joint-venture partners, we believe we can quickly develop and rollout a unique and scalable online platform that will effectively service the needs of affluent Chinese property investors around the world, who are looking for a seamless way to build a diversified real estate portfolio across the globe.

“We envisage that with just a click of a button, users will be able to view property listings from the likes of GAP, franchisees of C21-HK and other real estate agencies that the Group plans to bring onboard. With another click, they can select their property of choice in the desired location. The whole process will be simple and fuss-free. We are confident that this online portal will take off quickly as it taps a ready audience.” To help fund this push back into sustainable growth, APSIL has proposed a rights-cum-warrants issue, consisting of up to 3,373,458,070 new ordinary shares with 3,373,458,070 warrants, to raise up to S$16.9 million. In addition, the Group expects to raise a further RM10.7 million (about S$3.8 million) through its proposed divestment of HMS Capital Sdn Bhd (“HMS”), which owns its bereavement care services business.

APSIL will convene an extraordinary general meeting at a later date to approve the change in its core business to a real estate agency business, the acquisition of C21-HK, and the acquisition of GAP. Shareholders’ approval will also be sought for the Group to form the equally owned joint-venture company with CREU and OHLF. Shareholders’ approval will also be sought for the disposal of HMS and, lastly, the rights-cum-warrants issue as well as the adjustments issue. Adjustments will be made to the number and/or exercise price of APSIL’s outstanding warrants through which APSIL can issue additional warrants and shares (upon exercise of these warrants). When all these have been approved, APSIL can then channel resources into building and expanding its new real estate agency business.

Looking ahead, Dato’ Dr Choo noted: “This new core business will allow APSIL to benefit from a diversified global platform, moving it away from its single-country focus on Malaysia, and enabling it to explore exciting new opportunities for growth.”