MPHB Cap eyes top 10 spot

Saturday June 29, 2013
MPHB Cap eyes top 10 spot
By LIZ LEE 
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KUALA LUMPUR: MPHB Capital Bhd (MPHB Cap), a spin-off of Multi-Purpose Holdings Bhd (MPHB), is targeting to be a top-10 general insurance player in Malaysia by end-2015.

The group, predominantly a general insurance company, is confident that the internally generated funds would be able to see through its growth plans.

Its initial public offering (IPO) yesterday, which came on the heels of a renounceable offer for sale of 715 million shares in MPHB Cap by MPHB to the shareholders of MPHB on the basis of one MPHB Cap share for two MPHB shares held, was not open to the public.

Insurance arm Multi-Purpose Insurans Bhd's chief executive Ong Kok San said: “The authorities require us (as an insurance company) to have RM100mil in minimum paid-up capital, which we have satisfied.

“At the same time, based on our risk-based capital, our capital adequacy ratio is over 200%, so we are confident that we don't need extra funding for the expansion.”

Ong believes that reaching the top-10 category from its present 13th ranking among 26 local general insurance companies is not a very onerous task.

“We have our strategies in place to penetrate the market further. We just need a bit of push,” he said after the listing ceremony.

The company would focus on fire and travel insurance, where the margins were better compared with the motor insurance segment, Ong added.

Among its key strategies are to expand into the retail market with new products and schemes, increase distribution channels via bancassurance with more local and foreign banks, and expanding its network agency by 10% per annum for the next three years.

It will also grow its bumiputra broking market and enhance its e-commerce platform as an alternative distribution channel.

MPHB Cap now has a market share of 6.1% out of the RM8.1bil locally-owned insurance company category.

As for the group's 1,093ha land bank and two properties around Kuala Lumpur, Selangor, Penang and Johor, property division assistant general manager Ivevei Upatkoon said the group was essentially a landowner and property investor, and not a developer.

The eldest daughter of managing director Tan Sri Surin Upatkoon said: “We have no intention of going into developing, as we would need a lot of capital. We are looking for joint-venture (JV) partners to develop the land or if the opportunity arises, dispose it.”

Surin himself added that the company does not intend to retain its land or property assets but may consider it if there was good value. “The idea is to maximise the value for shareholders.”

MPHB Cap is in a JV with Bandar Raya Developments Bhd for the development of land in Rawang, Gombak and Penang.

Rawang is a residential development with a small commercial village, while Gombak and Penang are planned for residential developments. Its 122ha Gombak land parcel is the long-closed amusement park, Mimaland.

The gross development value (GDV) for the three projects is RM4.2bil. MPHB Cap's share of the GDV is 22%, which rounds up to about RM924mil.

“We have submitted the Rawang masterplan to the authorities for approval but the other two are in the preparation stage,” Ivevei said.

The company also fully owns the Flamingo Hotels in Ampang, Kuala Lumpur and Penang.

MPHB Cap's debut on Bursa Malaysia opened at RM1.45 or a 45% premium to its offer price of RM1. The counter closed at RM1.37 on a 2.48-million trading volume.

MPHB, meanwhile, closed one sen lower to RM3.61.

The listing of MPHB Cap, oversubscribed by 1.38 times, was to demerge the financial services and other investments from the gaming business of MPHB to improve the operational and financial efficiency of the businesses.

MPHB is also proposing to change its name to Magnum Bhd to reflect its gaming operations, which the Magnum Corp Sdn Bhd management team continues to helm.