SINGAPORE (Jan 8): Rich Capital Holdings is planning to expand into the construction business with the proposed acquisition of two construction firms for up to $43.98 million.

The company has entered into a conditional share purchase agreement with Wang ZhenWen and Rich-Link Group (RLG) to acquire 100% of Rich-Link Construction (RLC) and Rich-Link Builders (RLB).

Both companies are effectively owned by Wang, who is also the controlling shareholder and the non-independent non-executive chairman of Rich Capital.

RLC and RLB are well-established, profitable companies with proven track record in construction and property management in Singapore for the last 14 and three years, respectively.

Collectively, RLC and RLB have completed numerous projects spanning public and private, residential and industrial; RLC, in particular, has significant experience as a main contractor, as reflected in its BCA Grade A1 rating, which allows it to tender for projects of unlimited tendering value.

As at end December, RLC’s construction projects involved a public residential project, Stars of Kovan, a private residential development at Upper Serangoon Road, and Oxley Convention City, in Batam, Indonesia while RLB’s current projects include mainly private residential developments.

The aggregate consideration of up to $43.98 million was arrived at via arm’s length negotiations.

Rich Capital will pay the sellers via the issuance of new shares at 0.6 cent each over two tranches. The second tranche payment could be adjusted depending on the level of cumulative net profit before tax of the target group for the period.

Shares in Rich Capital last traded at 0.6 cent on Jan 3.

The proposed acquisition is subject to, among others, the approval of shareholders of Rich Capital at an EGM.

On the back of share issue to Wang and RLG, both parties will collectively own up to 64.74% of the enlarged share capital of Rich Capital upon completion of the transaction.

As such, an approval on a whitewash resolution at the EGM will also be needed to waive the requirement for Wang and RLG to make a mandatory general offer for Rich Capital.