KUALA LUMPUR (June 24): Sunway Bhd’s (KL:SUNWAY) has proposed to acquire the remaining 70% stake in its joint venture (JV) Daiwa Sunway Development Sdn Bhd (DSD) for RM25.5 million.

To recap, in June 2015, Sunway via its 60%-owned JV Sunway Iskandar Sdn Bhd (SISB) and Daiwa House Malaysia Sdn Bhd (DHM) formed the JV company on a ratio of 30:70 respectively, to construct 100 prefabricated homes in Iskandar Malaysia, Johor.

DHM is wholly-owned by Japan’s largest prefabricated homebuilder Daiwa House Industry Co Ltd, according to Sunway’s filing on Bursa Malaysia.

Upon completion of the acquisition, Sunway pointed out in the filing to Bursa Malaysia that the acquisition will also entail financial requirements to fund the future development of Sakura Residence, Sunway noted.

“However, Sunway will take the necessary steps to mitigate the risks identified by obtaining external debt financing as the development progresses.

“No assurance can be given that significant changes in any of these factors will not materially affect Sunway’s operations and financial performance,” it said.

The bourse filing said that SSIB had entered into a share sale and purchase agreement with DHM to acquire 175,000 ordinary shares and 71.67 million redeemable preference shares, representing 70% equity interests in DSD from DHM.

Sunway, whose shares have gained 72% year-to-date, said that DSD will become a wholly-owned subsidiary of SISB upon completion of the proposed acquisition — which is expected to be completed by June 30.

“The proposed acquisition is in line with the overall development strategy of SISB underscored by Sunway’s confidence in the prospects of the remaining phase in Sakura Residence which will be constructed using conventional method and the prospect of developing Sunway City Iskandar Puteri into Sunway’s next flagship township,” it said.

The conglomerate said the acquisition will be satisfied by cash from internally generated funds.

As of end-March 2024, Sunway's cash and bank balances amounted to RM2.67 billion, while borrowings stood at RM10.28 billion, its latest financial statement showed.

Shares of Sunway settled down five sen or 1.33% to RM3.70 on Monday, giving the group a market capitalisation of RM21.02 billion.