This article first appeared in The Edge Malaysia Weekly on July 17, 2023 - July 23, 2023

BERJAYA Corp Bhd (BCorp) is understood to be close to hiving off its waste management unit — Berjaya EnviroParks Sdn Bhd ­(BEParks) — to Naza Corp Holdings Sdn Bhd, sources familiar with the matter tell The Edge.

“The deal is more or less concluded, with all key considerations ironed out. The acquisition is estimated to be worth a considerable amount … a few hundred million, from what I gather,” one source says.

It is understood that AmBank Bhd is advising BCorp on the sale of BEParks. According to several sources, BCorp’s plans are to sell its entire stake in BEParks and use the proceeds to pare down its borrowings.

Meanwhile, other sources heard about the deal because Naza Corp was scouting around for funding for the planned acquisition of BEParks and is understood to have secured financing from a local banking outfit.

An invitation sent out by BCorp last Friday for a signing ceremony with Naza Corp on Monday (July 17) strengthened the likelihood of the conclusion of the sale. The signatory for BCorp, according to the invitation, is none other than Tan Sri Vincent Tan Chee Yioun, patriarch of the Berjaya group of companies; Naza Corp is to be represented by managing director Tan Sri Ismee Ismail.

Trading in BCorp shares will be suspended on Monday, pending an announcement of a material transaction, the conglomerate’s filing with Bursa Malaysia last Friday shows.

A market observer says the proposed disposal of BEParks is part of BCorp’s three-year strategic transformation plan to divest its non-core businesses. The plan was initiated by its former CEO Abdul Jalil Abdul Rasheed in 2021, with a target to divest RM5 billion worth of assets over a five-year period.

It is understood that the latest planned disposal trumped an earlier one to float BEParks on Bursa Malaysia, as there was difficulty in reaching an agreement on the company’s valuations. Some of the transformation initiatives were also placed on the backburner, when Abdul Jalil left BCorp in March 2022.

BEParks’ key assets include the Bukit Tagar Sanitary landfill located in Sg Tinggi, Hulu Selangor, which it operates and manages under a 30-year concession expiring in January 2044. According to BCorp’s 2022 annual report, the landfill manages 2,719 tonnes of municipal solid waste from Kuala Lumpur, Selayang and Hulu Selangor daily.

In 2020, BCorp acquired the 40% stake it did not own in BEParks from KUB Malaysia Bhd for RM80 million cash. Based on back-of-the-envelope calculations then, the deal valued BEParks at almost RM200 million, indicating that BCorp stands to rake in a tidy sum from the disposal of BEParks.

For financial year 2022, BEParks posted a pre-tax profit of RM15.4 million on the back of RM47.7 million in revenue.

BEParks owns Berjaya Energies Sdn Bhd (BEnergies), which is involved in the generation and sale of green electricity from landfill gas. Having been operating since 2011, BEnergies has a capacity of 12mw, with a pre-tax profit of RM10 million on the back of RM19.2 million in revenue in FY2022.

BEnergies also has a power purchase agreement with utility giant Tenaga Nasional Bhd for a 16- to 21-year period at a rate of 42 sen to RM1.049 per kW.

Other assets parked under BEParks that are likely to undertake related businesses include 60%-owned Amita Berjaya Sdn Bhd, 70%-controlled J&T Berjaya Alam Murni Sdn Bhd and 60%-held Berjaya Eco Services Sdn Bhd.

For the first nine months ended March 2023, BCorp slipped into the red with a net loss of RM37.97 million, in contrast to a net profit of RM5.81 million in the same period a year earlier. Cumulative revenue rose to RM7.08 billion compared with RM5.86 billion previously.

As at end-March this year, BCorp had a net debt of RM4.62 billion and total assets of RM21.73 billion.

Last Friday, shares in BCorp closed unchanged at 30.5 sen, giving it a market capitalisation of RM1.7 billion.

Naza Corp, once a powerhouse in the automotive business, has been paring down assets in the sector. In March this year, the group lost its prized Ferrari distributorship, which it had held from 2008. In November 2020, Naza Corp gave up two brands under its stable — Kia and Peugeot — before hiving off its manufacturing plant in Gurun, Kedah, to Stellantis NV in October 2021.

For its financial year ended December 2021, Naza Corp chalked up a profit after tax of RM145.9 million against RM460.19 million in revenue. As at end-2021, it had RM3.82 billion worth of total assets, with total liabilities of RM2 billion and RM479.41 million in reserves.

Naza Corp is controlled by the family of the late Tan Sri S M Nasimuddin S M Amin, who died in May 2008. It is noteworthy that Tan’s daughter Chryseis is married to Nasimuddin’s son S M Faliq Nasimuddin. 

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