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PETALING JAYA (Aug 14): Hextar Global Bhd (KL:HEXTAR) is proposing to enter the property development business through a joint venture (JV) with a unit of Perbadanan Kemajuan Negeri Selangor (PKNS) to develop a mixed-use township on about 240.39 acres in Siera Alam, Shah Alam.
In a Bursa Malaysia announcement on Friday (Aug 14), Hextar Global said its indirect unit Hextar Landmark Sdn Bhd had entered into a JV and shareholders’ agreement with PKNS’ wholly owned subsidiary Kotaputeri Development Sdn Bhd (KDSB), through Hextar Siera Sdn Bhd, to undertake the project.
Hextar Landmark will hold 70% of Hextar Siera, while KDSB will hold the remaining 30%, following the proposed allotment of shares in the JV company. Hextar Global’s effective interest in Hextar Siera will then be 49%, as Hextar Landmark is 70%-owned by Hextar Global’s wholly owned Halex Realty Sdn Bhd and 30%-owned by Cekap Sekata Sdn Bhd.
At the date of the announcement, Hextar Siera was wholly owned by Hextar Landmark, giving Hextar Global an indirect 70% interest in the vehicle before KDSB’s proposed equity participation.
In a separate press release on Friday (Aug 14), Hextar Global said the proposed Siera Alam development has an estimated gross development value (GDV) of RM3.8 billion and is expected to be rolled out in phases over about 10 years. It described the venture as its maiden property development project.
According to the press release, the preliminary product mix comprises terrace houses, semi-detached villas, villas and commercial components, supplemented by selected high-rise residential, commercial and lifestyle components. The final development concept and product mix remain subject to finalisation, regulatory approvals and market conditions.
JV company to acquire land for RM270m
Separately, Hextar Siera has entered into a sale and purchase agreement with PKNS to acquire the approximately 240.39-acre leasehold development land in Section U10, Shah Alam, for RM270 million cash.
The land is currently registered in PKNS’ name and is vacant. It comprises multiple lots with varying existing land-use categories, express conditions and restrictions in interest, while the acquisition remains subject to, among others, approvals from the Ministry of Economy, Estate Land Board and relevant state authority.
The RM270 million purchase price is equivalent to the land’s market value as appraised by independent valuer Laurelcap Sdn Bhd. Laurelcap used the comparison approach as its primary method, with the residual method under the income approach as a cross-check, based on a July 27, 2026 valuation date.
Hextar Siera intends to fund up to RM189 million, or 70% of the land purchase price, through bank borrowings. Assuming that financing is secured, the remaining RM81 million will be funded through the subscription of redeemable non-convertible cumulative preference shares, with Hextar Landmark contributing RM56.7 million and KDSB RM24.3 million.
If Hextar Siera is unable to obtain the assumed RM189 million in bank borrowings, KDSB’s aggregate contribution towards the land purchase is capped at RM27.7 million, while Hextar Landmark will fund the remaining shortfall. Hextar Landmark’s contribution could therefore rise to as much as RM242.3 million if no bank borrowings are obtained.
Hextar Global said the estimated development expenditure and funding requirements for developing the land have yet to be finalised and are separate from the RM270 million funding amount for the land purchase.
The land acquisition comprises Phase 1 and Phase 2 land, with payment obligations structured in two stages. Hextar Siera is to pay RM160 million for the Phase 1 land, comprising RM3.2 million upon execution of the SPA, RM12.8 million within 30 days and the RM144 million balance by the earlier of three months after fulfilment or waiver of all conditions precedent, or Dec 15, 2026, in each case subject to fulfilment or waiver of those conditions.
Payment for the Phase 2 land, excluding the purchaser’s portion of Lot 17, is due by Dec 31, 2028. For the purchaser’s portion of Lot 17, payment is due by Dec 31, 2028 or three months after Hextar Siera receives a copy of the state authority approval for its transfer, whichever is later.
Shareholders’ approval required
Hextar Global is also proposing to diversify its existing businesses to include property development, construction, property investment and management.
The group said the new businesses may contribute 25% or more of its net profit and/or result in a diversion of 25% or more of its net assets in the future, triggering the requirement for shareholders’ approval under Bursa Malaysia’s Main Market Listing Requirements. Its existing businesses will continue as core businesses.
Hextar Global will seek shareholder approval at an extraordinary general meeting for the proposed diversification. The land acquisition is conditional upon, among others, approval from the Ministry of Economy, the Estate Land Board, the relevant state authority and Hextar Global shareholders for Hextar Siera to acquire the development land from PKNS.
The proposed JV is conditional upon the proposed diversification, while the proposed diversification is not conditional upon the JV. Under the JV agreement, completion is also subject to, among others, shareholder approval for Hextar Landmark and Hextar Global in relation to Hextar Landmark undertaking the development.
The proposals are expected to be completed in the fourth quarter of 2026, subject to the conditions precedent and requisite approvals. This refers to completion of the proposals, rather than the development itself, which is expected to be undertaken over about 10 years.
Hextar Global said the JV is not expected to contribute materially to its earnings for the financial year ending Dec 31, 2026, as the development remains at a preliminary stage.
Based on the assumption that Hextar Siera obtains RM189 million in bank borrowings for the land acquisition, Hextar Global’s pro forma gearing would rise to 2.49 times from 1.77 times, based on its audited financial position as at Dec 31, 2025.
Hextar Global requested a suspension of trading in its shares on Friday pending the material announcement. Trading in the shares will resume at 9am on Monday, Aug 17.
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