Paragon Globe ventures into healthcare sector

​Paragon Globe Bhd managing director has defended the group’s second related-party transaction (RPT) in a span of two years, saying the move will benefit the property and construction player

Paragon Globe Bhd managing director has defended the group’s second related-party transaction (RPT) in a span of two years, saying the move will benefit the property and construction player.

Datuk Seri Edwin Tan pointed out that the earlier RPT, back in Nov 2017, was already generating strong returns for the group.

“Our factories and shop offices in our Pekan Nenas land are selling well now, contributing to the healthy property revenue and profit of Paragon Globe, ” he told StarBiz.

The 2017 exercise saw the group, formerly known as Goh Ban Huat (GBH), fork out RM143mil to purchase industrial land and commercial property in the Pekan Nenas Business Park, Johor, from a company privately held by the Tan family.

The Tan family had entered GBH just two months prior to that, with a 51% controlling stake.

Following the first RPT, the group had announced a non-RPT RM60.9mil land acquisition early this month, ahead of the latest proposed RPT.

In that deal, Paragon Globe said it would purchase about 31.1 acres of freehold land in Pulai from Iskandar Capital Sdn Bhd for RM60.96mil. Iskandar Capital is owned by Kumpulan Prasarana Rakyat Johor Sdn Bhd, Khazanah Nasional Bhd and the Employees Provident Fund.

Last Friday, Paragon Globe announced its first step into the healthcare and wellness industry. The exercise will see Paragon Globe acquire land and a project to build a private hospital in Sepang, Selangor, from Tan in a RM52.9mil deal.

Paragon said it had agreed to subscribe to 52.9 million new shares, or a 99% stake, in Builtech Acres Sdn Bhd, a private company owned by Tan.

Builtech is the holding company for Sepang Medicity Sdn Bhd and holds two parcels of adjacent vacant freehold land zoned for commercial use. The land measures about 24.81 acres in total.

Builtech, on Nov 7, had entered into an agreement with Selgate Healthcare Sdn Bhd and Sepang Medicity Sdn Bhd to build and operate a 121-bed medical centre for 15 years with an option to renew for another 15 years.

On how the group ensured the interests of its minority shareholders were protected, Tan said the interested directors typically avoided having directly competing business with the public-listed company.

He noted that the latest transaction was structured to ensure that Paragon Globe had interests in both the hospital project and the adjacent land for potential expansion.

The deal, he said, was in line with Paragon Globe’s aspiration to be an integrated property player that focused on Johor as well as the Klang Valley.

“Healthcare and wellness remain a key area that we eventually want to go into.

“This project, which taps the expertise of our future operation partner, Selgate Healthcare, is only our first step of transformation as well as exposure to healthcare-related revenue, ” he said.

Asked why he had not taken on the project on his own instead of involving the listed company, Tan said he believed the project’s potential returns and exposure were a good fit for Paragon Globe.

He added that Paragon Globe was taking a 99% stake in the project as it aimed to reap the bulk of the economic benefits generated by the hospital project.

The projected gross revenue for the hospital, he noted, stood at RM199.65mil over the 15-year period.

The partnership with Selgate Healthcare, he added, would allow Builtech Acres to gain exposure to healthcare-related revenue by tapping into the healthcare operator’s expertise.

Selgate Healthcare, on the other hand, would be able to realise its expansion plans by leveraging on Paragon Globe’s balance sheet, he said. Selgate Healthcare is a unit of Perbadanan Kemajuan Negeri Selangor.

Source: The Star 

Posted on : 23 December 2019
Last Updated : Thursday 21st May 2020