ECM Libra’s 30% associate to sell entire 27% stake in TYK Capital to PE firm for RM120 mil

KUALA LUMPUR (May 8): ECM Libra Group Bhd’s 30%-owned associate Positive Carry Sdn Bhd is to exit TYK Capital Sdn Bhd by selling its entire equity interest of 27% in the company to Singapore-based private equity (PE) firm PrimeMovers Equity (S) Pte Ltd for RM120 million cash.

This came after Positive Carry inked a conditional sale and purchase agreement (SPA) with Enzo II Holdings Pte Ltd ― PrimeMovers’ special purpose vehicle ― to dispose its entire 24 million shares in TYK Capital.

“The parties to the SPA are all existing shareholders of TYK Capital (including Positive Carry) ― collectively being the sellers disposing their interest in TYK Capital ― and the buyer who will be purchasing the said interests,” ECM Libra said in a bourse filing on Monday (May 8). Based on back-of-envelope calculations, PrimeMovers is purchasing the TYK Capital shares at RM5 apiece.

“The company’s 30% share of the sale consideration will be RM36 million,” the hotel operator added.

ECM Libra added that the disposal of its effective equity interest of 8.1% in TYK Capital is expected to result in the group’s share of profits of approximately RM26.86 million ― share of sale consideration against carrying value of RM9.14 million as at end-December 2022.

“The board is of the view that the disposal is in the interest of the company, as it will (i) enable the company to realise the value of an investment outside its core focus area of hospitality after an 11-year holding period; (ii) improve the cash flow of the group; (iii) provide liquidity for new investments and initiatives that will enhance shareholder value; and (iv) provide additional working capital for the group’s operations,” the group reasoned.

It is worth noting that TYK Capital is the ultimate holding company of Engtek Group, which is involved in manufacturing precision engineering components. Engtek Group was previously listed on Bursa Malaysia as Eng Teknologi Holdings Bhd and was privatised in 2012.

Meanwhile, the remaining 70% equity interest in Positive Carry is held by Plato Capital Ltd, a substantial shareholder of ECM Libra.

Plato Capital director and substantial shareholder Datuk Lim Kian Onn is also the deputy chairman and substantial shareholder of ECM Libra. Lim directly owns a 13.81% stake in ECM Libra, and another 28.1% indirect stake of which 11.81% is via Plato Capital.

Besides this, Lim’s son, ECM Libra executive director and CEO Gareth Lim Tze Xiang, is also CEO of Plato Capital.

Shares in ECM Libra ended half a sen or 2.78% lower at 17.5 sen on Monday, giving the group a market capitalisation of RM83.99 million.