KUALA LUMPUR: Eco World International Berhad (EcoWorld International) announced today that it had entered into a Heads of Agreement (HoA) to partner with Willmott Dixon, a prominent UK company with over 160 years’ history to jointly develop 12 sites in Greater London and the South East of England.
“Today’s announcement is hugely significant for EcoWorld International. After considering numerous proposals offered to us we are delighted to be partnering with a company of the experience and stature of Willmott Dixon in a deal that potentially expands our presence in the UK to four times our current size,” said Tan Sri Liew Kee Sin, Executive Vice Chairman of EcoWorld International.
Apart from growing its development pipeline substantially, the announcement will also enable EcoWorld International to gain substantial local market share due to the location of the projects and the nature and affordable price points of the developments proposed.
“Our long-term goal is for EcoWorld International to be a truly international developer with a strong local presence and customer following in the UK similar to what the EcoWorld brand enjoys in Malaysia today. The proposed partnership with Willmott Dixon will greatly facilitate this,” said Dato’ Teow Leong Seng, President and CEO of EcoWorld International.
“Apart from the acquisition of a 70% interest in the project sites, we will also be acquiring a 70% interest in Willmott Dixon’s development management arm with full multi-disciplinary team of highly experienced personnel. This will provide us with a strong pool of talent and manpower resources to bring our UK business to greater heights going forward,” he added.
EcoWorld International’s decision to become a local player along with the size and scale of its proposed investment clearly demonstrate its strong belief in the fundamental strength of the UK housing market as well as the long-term growth potential of the UK economy.
Heads of Agreement to acquire 70% of Willmott Dixon’s residential development business
The Heads of Agreement, which is still subject to EcoWorld International’s board approval, will potentially see the acquisition by EcoWorld International of 70% interest in Willmott Dixon’s residential development business, presently held under Be Living.
Subject to agreement on final terms, the proposed acquisition is expected to be formalised in December 2017 and has the potential to increase EcoWorld International’s total presence in the UK fourfold by giving it access to a sizeable land bank of approximately 6,700 residential units with a total gross development value (GDV) of at least £2.5 billion. There is also a framework agreement in place for the development of a further 1,500 units of which the GDV is too early to determine. This will add circa 8,200 units in addition to the EcoWorld International group’s current Prime Central London land bank of circa 2,500 residential units which is being developed under its existing joint venture with Ballymore.
More importantly, the proposed acquisition will enable EcoWorld International to enter an extensive part of the popular London property market including projects in Barking and Dagenham, Barnet, Brent, Bromley, Ealing, Hounslow, Lambeth, Tower Hamlets and Westminster all of which are a short commute from Central London and International Airports. It also includes one project outside of London in Woking, a busy commercial town, with a rapidly expanding artistic and cultural life within 25 minutes of Central London and close to London Heathrow.
In addition, most of the projects fall within the price bracket that would entitle potential buyers to benefit from government homeownership initiatives such as the Help to Buy scheme, where the government will provide an equity loan for new build residential properties of up to 40% of the price within Greater London and 20% outside London. The equity loan will be interest free for a duration of 5 years.
This unique opportunity therefore empowers EcoWorld International to play a key role in meeting the needs of the domestic mainstream market where demand is the strongest with a high quality product at prices suitable to these local areas. The property group further plans to both develop mainstream residential units for Open Market Sale and enter the Build to Rent market, which has become increasingly popular in London as demand grows for purpose built private rental accommodation.
Following completion of the proposed acquisition, EcoWorld International will work closely with Willmott Dixon, a privately-owned company with over 160 years’ experience, shared brand values and growth aspirations, to grow the joint-venture into a long-term player in the residential development market.
The deal will operate outside of EcoWorld International’s joint venture with Ballymore Group, which continues to seek attractive opportunities in the higher-end Prime Central London locations.
Commenting on the Heads of Agreement, Liew said: “EcoWorld International sees great potential in the UK and this deal shows our ambition to further grow our business there. Today’s announcement reinforces our commitment to play a positive and sustainable role in the UK market to address the housing shortage across London and the South East of England. As we work hand-in-hand with Willmott Dixon to develop quality homes that an average income earner is able to afford, we are confident that our shared values and complementary strengths will enable us to build a highly successful business together that is able to serve the needs of both the local market and broader international audience that calls London home.”
Commenting on the Heads of Agreement, Rick Willmott, Chief Executive of Willmott Dixon, said: “The proposed investment, by EcoWorld International, is the culmination of our long-term strategy to inject additional capital to support Be Living’s growth plans as a stand-alone business following its demerger from Willmott Dixon last year. EcoWorld International is a great fit for Be Living, both culturally and in its ambition. The company shares our focus on high-quality residential developments that create a sense of place and legacy, and our ability to accelerate the delivery of housing on regeneration sites by combining homes for rent with private sale was also a key attraction for EcoWorld International. This investment will take Be Living forward to its next stage of growth and we look forward to developing a successful long-term partnership with EcoWorld once this transaction is concluded.”
Further details of the proposed acquisition and joint-venture with Willmott Dixon will be announced when the definitive agreements are executed between the parties.
Funding for the proposed acquisition of the 70% stake in Willmott Dixon’s residential development business is expected to come from a combination of the proceeds of EcoWorld International’s recent initial public offering and bank borrowings / other debt instruments, details of which will be disclosed later.